The Fed has been “tedious” at a time it should be “exciting”

After a two day meeting you can wonder why it took 48 hours to…do nothing!

From the Statement:

The Federal Reserve on Wednesday said it would stop its long-running bond purchase program at the end of October, ending a historic experiment that has stirred intense debate about its effects in markets even though the central bank said it accomplished(!) its main goal of reducing unemployment.

At the same time, the Fed upgraded its assessment of the job market’s performance while pointing to some short-term downside risks on inflation. It stuck to an assurance that short-term interest rates will remain near zero for a “considerable time.”

Let´s see what Quarter 3 GDP (both R & N) looks like tomorrow.

3 thoughts on “The Fed has been “tedious” at a time it should be “exciting”

  1. “the Fed also said it noted it was well below its 2 percent inflation target and would aggressively pursue policies to correct the shortcoming.”
    Right?

    • Ben, no. It added Plosser’s and Bullard’s sooner rather than later language to the statement, with a caveat that if it tightens too much then it might rethink things – all dependent on data. Bullard wasn’t messing around on Oct. 9 when he he said the markets have different ideas than the FOMC, and it won’t end well. He told everyone that the members of the FOMC all have their heads firmly planted in dark smelly places… or I mean that monetary policy lacks context.

  2. dajeeps, are you sure? it seems to me to just say a net nothing at all. if the sun is out the sky won’t be overcast, if it is overcast the sun won’t be out.
    “However, if incoming information indicates faster progress toward the Committee’s employment and inflation objectives than the Committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated. Conversely, if progress proves slower than expected, then increases in the target range are likely to occur later than currently anticipated. ”

    That said, this sounds a bit hawk’ish, and aysmmetrical, as Marcus points out. When oil is very low they don’t want to look through the effect, when it’s high they think the public is too stupid to look through it and the inflation genie will pop out and ruin us all:
    “Although inflation in the near term will likely be held down by lower energy prices and other factors, the Committee judges that the likelihood of inflation running persistently below 2 percent has diminished somewhat since early this year.”

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