FOMC Statement is “frozen”

This is like “cheating in the exam”. Tom, Dick and Harry gave exactly the same answer to the question! Look at the last three FOMC meetings:

Sep 21

The Committee continues to expect some pickup in the pace of recovery over coming quarters but anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Moreover, there are significant downside risks to the economic outlook, including strains in global financial markets. The Committee also anticipates that inflation will settle, over coming quarters, at levels at or below those consistent with the Committee’s dual mandate as the effects of past energy and other commodity price increases dissipate further.

Nov 2

The Committee continues to expect a moderate pace of economic growth over coming quarters and consequently anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Moreover, there are significant downside risks to the economic outlook, including strains in global financial markets. The Committee also anticipates that inflation will settle, over coming quarters, at levels at or below those consistent with the Committee’s dual mandate as the effects of past energy and other commodity price increases dissipate further. However, the Committee will continue to pay close attention to the evolution of inflation and inflation expectations.

Dec 11

The Committee continues to expect a moderate pace of economic growth over coming quarters and consequently anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee also anticipates that inflation will settle, over coming quarters, at levels at or below those consistent with the Committee’s dual mandate.

In other words, the Committee continues to expect “too little” but still refrains from “acting”. Why? According to Scott Sumner it means:

We expect to fail, but we’ll keep a close watch on things just to make sure.

But that´s a most “stupid” attitude, leading to the following advice from Earl Thompson not long before passing away:

Advice to the President

 President Obama should immediately call, just as President Bush should have called, Chairman Bernanke into his office to request his immediate resignation on the grounds that he significantly failed to do his job.  No FOMC should ever allow commodity prices to plummet over 75 percent for half-a-year (see this) without resisting it with a significantly above-trend jump in an appropriate money supply.

Maybe that´s why some have started “practicing doing Bernanke´s obituary“!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.