Goldman's Jan Hatzius stands by his call...
We expect the Federal Open Market Committee (FOMC) to ease monetary policy at next week’s scheduled meeting. Our baseline is a new asset purchase program that involves an expansion of the balance sheet, but an extension of Operation Twist and/or a further lengthening of the short-term interest rate guidance in the FOMC statement beyond the current “late 2014” formulation are also possible.
As for the weak economy, the numbers are really getting down there ...
Disappointments across a broad range of indicators this week caused a two-tenths decline
in our GDP tracking estimate for Q2 to 1.6%. Though the CPI excluding food and energy held
at 2.3% year-on-year, we see increasing signs that core inflation will fall over the next year.
