Fed Statement Dissection

March Today Our Two Pips
The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent. The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent. Same Ol’ Same Ol’. Straight chillin’ fo’ da seventh straight meeting.
Recent indicators have been mixed and the adjustment in the housing sector is ongoing. Nevertheless, the economy seems likely to continue to expand at a moderate pace over coming quarters. Economic growth slowed in the first part of this year and the adjustment in the housing sector is ongoing. Nevertheless, the economy seems likely to expand at a moderate pace over coming quarters. Economy has now "slowed" instead of "mixed". Housing market continues to suck. The "moderate pace over coming quarters" comment still intact. The Fed still believes economy will recover later this year. Just another way of the Fed saying, "No need to be trippin’. We ain’t cuttin’ rates. It’ll still all gravy baby. "
Recent readings on core inflation have been somewhat elevated. Although inflation pressures seem likely to moderate over time, the high level of resource utilization has the potential to sustain those pressures. Core inflation remains somewhat elevated. Although inflation pressures seem likely to moderate over time, the high level of resource utilization has the potential to sustain those pressures. Core inflation "remains" somewhat elevated instead of "have been". The Fed isn’t convinced that one month of falling inflation is enough to change their stance. This is definitely hawkish.
In these circumstances, the Committee’s predominant policy concern remains the risk that inflation will fail to moderate as expected. Future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information. In these circumstances, the Committee’s predominant policy concern remains the risk that inflation will fail to moderate as expected. Future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information. Same ol’ statement from March. They ain’t backing down from their fight against the inflation monster. Looks like they holding rates for awhile. With all the terrible US economic data that recently came out, keeping this statement unchanged is a slap in many economists’ faces and should be dollar bullish.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Cathy E. Minehan; Frederic S. Mishkin; Michael H. Moskow; William Poole; and Kevin M. Warsh. Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Cathy E. Minehan; Frederic S. Mishkin; Michael H. Moskow; William Poole; and Kevin M. Warsh. The most powerful people in the world. 

4 comments

  1. stucros

    thanks once for an excellent break down. This is as good, perhaps better, than any interbank report i’ve seen!!! for people who want ore colour on the fed thinking there is an interesting article in the economist this week about the high inflation low growth conundrum!

    Reply
  2. stucros

    thanks once for an excellent break down. This is as good, perhaps better, than any interbank report i’ve seen!!! for people who want ore colour on the fed thinking there is an interesting article in the economist this week about the high inflation low growth conundrum!

    Reply

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