WSJ reporter and long time Fed watcher Greg Ip makes the observation that the Fed was somewhat less bullish this meeting than the last FOMC meeting. Their “slightly less upbeat tone” is what drove long-term bonds up, sending yields down sharply.

The attached document highlights the language change, which recognizes the continuing tepid pace of job creation. It is less of a starry eyed “jobs are right round the corner” than the prior month’s statement:

click for larger display
fed_release_mar

The problem the Fed faces is a Hobsons choice: “Raise rates too soon, and the recovery may be aborted. Raise them too late, and inflation may bubble back. Do it clumsily, and both markets and the Fed’s credibility could be injured.”

Sources:
Fed Looks at Several Approaches It Can Take When Raising Rates
By GREG IP
Staff Reporter of THE WALL STREET JOURNAL
March 17, 2004; Page A1

http://online.wsj.com/article/0,,SB107884953795750297,00.html

Comparisons between Fed Statements
WSJ, March 17, 2004

http://online.wsj.com/documents/retro04-fedrelease03.html

FOMC Meeting Statement
Release Date: March 16, 2004

http://federalreserve.gov/boarddocs/press/monetary/2004/20040316/default.htm

Category: Finance

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