Dovish words from a number of Fed officials - including a hawk - calmed markets and provided fuel for a strong rally. Bobbi Rebell reports.
Nothing like a dose of Fed dovishness to perk up the markets. Beaten down stocks rallied Friday - in part on hopes the Fed may slow the winding down of its bond buying program because of a slowing global economy. On Thursday St. Louis Fed Chief James Bullard implying the Fed could even start increasing bond puchases and that its keeping its options open. Boston Federal Reserve Bank President Eric Rosengren adding Friday that he would not rule anything out. And they are not alone - Reuters' markets editor Dan Burns: SOUNDBITE: DAN BURNS, MARKETS EDITOR, REUTERS (ENGLISH) SAYING: "We had an interview earlier this week with John Williams the San Francisco Fed President who said you know, and if worst comes to worst, he would be open to a QE 4. He does want to end QE3 now and see how that goes, but he thinks that quantitative easing has been an effective tool, and if need be he would revisit it." The comments come at a time of extreme volatility in the markets - as fears about the global economy, the spreading Ebola virus, falling oil prices and struggling hedge funds converged into panic selling and violent swings. Moody's Senior Economist Ryan Sweet: SOUNDBITE: RYAN SWEET, SENIOR ECONOMIST, MOODY'S (ENGLISH) SAYING: "You know the global economy is a bit of a mess, eurozone economy is you know teetering on another recession, deflation concerns are there. There is a lot of worries about what that is going to mean for the U.S. economy and hence expectations for future growth in the U.S. are being ratcheted down and that signals that the Fed will lift off later than anticipated." But Boston's Rosengren said as of now- the market turbulence and the global weakness have not hurt U.S. economic forecasts - and probably won't be enough for the Fed to shift gears and maintain or expand its bond buying program. The Fed's next meeting is October 29th.