But most Americans are partially the difference not feeling, because these services amazing low been. The latest estimates of economists in fact suggest that the pace of recovery from the global financial crisis started since November, when the Fed has marked purchase $ 600 billion in government bonds, private dollars in investment transfer, create the jobs.
As the Fed Policy Board prepares for Tuesday and Wednesday the Fed Chairman Ben S. Bernanke meet - after which, to tell a press conference for the first time, their decisions will hold for the public - a wide range of economists say that the disappointing results show the borders of the Central Bank ability, lift the nation out of its economic malaise.
"It is good to really turn things for the setting of the case, and the recovery drive, I just don't think that monetary policy, that energy has", said Mark Thoma, Professor of Economics at the University of Oregon, refers specifically to the bond buying program.
Mr Bernanke and his supporters say that the purchases have improved economic conditions, but delete fears of deflation, a pattern of falling prices, to delay purchases and stable growth can. Inflation, which is in masses of advantage, has closer to a healthy level purchase of bonds rose since the Fed.
"These actions had the expected impact on the markets and are therefore considerable support to the creation of jobs and the economy", Mr. Bernanke said speech in February, has an argument, he often repeated.
But remains slow growth, jobs remain in short supply, and with the debt purchases should end in June, the Fed must now decide what comes next.
The Fed generally encourages growth by he interest rates. In normal times, it reduces to disseminate short-term interest rates and the impact on other types of borrowing such as corporate bonds and mortgage loans. But hovers with short-term interest rates close to zero since December 2008, the Fed has tried, long-term interest rates to attack directly from the entry into the market and offers accept lower returns.
The Fed limited the program to $600 billion under considerable pressure. While this sounds like a lot of money, the purchases have kept not even step with the Government issuing new debt, so in a way that amounted to efforts treading water. And a growing body of research suggests that the Fed may have had a greater impact, with more money on a wider range of debts, such as covered bonds, as it originally did.
A number of critics, meanwhile, argued that the Fed has already way too much done accumulation a portfolio of more than $2 trillion, that ability to increase interest rates to curb inflation could prevent the Central Bank. Some of these critics see as heralding the wider price increases the rising price of oil and other raw materials.
"I was a big fan of it in the first place," said Charles I. Plosser, President of the Federal Reserve Bank of Philadelphia and one of the ten members of the Fed policy making Board. "I think it would have much influence, and it complicates the exit strategy." "And what we have seen, has not changed my mind."
The Fed decision for the purchase of bonds, known as quantitative easing, emulates the Japanese Central Bank, which began to break through the purchase of bonds in 2001 to a deflationary cycle.
The American version worked well at first. From November 2008 to March 2010 the Fed bought more than $1.7 trillion in mortgages and Government bonds, keep mortgage rates and reducing the cost of borrowing for respected companies to half a percentage point, according to several studies. This is an annual savings of $ 5 million for each $1 billion borrowed from.
As the economy sputtered last summer, Mr. Bernanke specified in an August speech, that the Fed would soon begin a second round of quantitative easing, as QE 2. The first answer was the same: asset prices rose, interest rates fell and the dollar fell in value.
But in addition to the his smaller and only focused on treasuries, there was also a problem of the diminishing returns. The first round of purchases reduced the cost of borrowing it to enticing, Scheu investors accept to lower credit spreads. With the markets closer to normality Mr Bernanke warned in his speech August, that it was not clear to convince comparable success had investors to accept even lower yields that the Fed.
"Such purchases with their biggest impact expected in times of economic and financial stress seem," he said.
The Fed says that his expectations were tempered by these realities, but that the program has nevertheless reduced percentage point relative to the prices investors in the Fed would have required absence yields on long-term government bonds by over 0.2. This is about the same effect, the Central Bank by lowering its benchmark rate 0.75 percentage point, which would be an aggressive movement in normal times could have achieved.
But some economists say the new program had more limited effect on the wider economy as a traditional cutting of short-term interest rates would. The Fed predicted that investors were forced, other types of debt, buy the reduction for other borrowers. But the supply of treasuries for investors has since November increase, issuance of new government debt of the Fed overhauled purchases.
A study published in February found that the interest rates cut, but only for companies with top credit ratings. "Prices, highly relevant for households and many companies are - mortgage rates and prices on lower grade corporate bonds were largely unaffected by the policy," wrote Arvind Krishnamurthy and Annette Vissing-J?rgensen, both finance professors at Northwestern University.
Another clue to its limited success: bonds not significant growth, suggesting that companies - sitting see record pile of cash - not yet opportunities for new investments. Until they do, some economists argue that urges the fed to a string.
"What has done it?" It has eased credit conditions, it has pumped up the stock market, he has suppressed the dollar, "Said Mickey levy, Bank of America's Chief Economist." "But the Fed thinks that treasuries purchase and flatulence really going positions of its balance sheet to stable job increases create?"
