Industry NewsMarkets & Economy

Banks play ‘hot potato’ with loans

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For the first time since 2002, the Fed said that inflation is uncomfortably below target (any time below 1 percent, some sectors of the economy are already in deflation), and the Fed "... is prepared to provide additional accommodation if needed." Credit markets took the Fed's post-meeting announcement on Tuesday and ran a bit too far: the 10-year Treasury note stone-dropped to 2.5 percent, today back to 2.6 percent, but mortgages were little changed. Given the deep policy division at the Fed (the do-nothings paralyzing the do-somethings), I think the Fed will need to see weaker data to resume quantitative easing. Martin Feldstein this week had the best description of the economy: "In a holding pattern." He sits on the National Bureau of Economic Research committee that calls the beginning and end of recessions, and looked less than thrilled at its pronouncement that the Great Recession ended 15 months ago. Next Fed meeting: the day after Election Day...