The FOMC commentary on the economy and inflation is pretty much unchanged from the statement they gave in Dec. They continue to believe the economy has been expanding moderately, notwithstanding some slowing in global growth. The only real change of substance was they replaced the time frame of keeping rates ‘exceptionally low’ from mid 2013 to late 2014. This squares with an extremely dovish Fed where 2 of the 3 new members are so and now 8 of the 10 voting members are. Lacker, a new voting member and one of the 2 remaining hawks, dissented and didn’t want to specify the time frame. Bottom line, the Fed continues to believe that pinning rates at near zero is the cure all and seem to ignore the experience so far in the US and certainly what Japan has gone thru. This is NOT economic stimulus as they seem to think. Also, calling for where rates will be by late 2014 is a waste as anything can change in economic growth and inflation well before then. What the Fed is trying to do is jawbone the yield curve with their words.

Category: MacroNotes

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

5 Responses to “FOMC intent on being the BoJ”

  1. wally says:

    “they replaced the time frame”

    I’s say they replaced the ‘estimated’ time frame. I think that is a rather different thing.

  2. Futuredome says:

    Being BoJ is the only thing they got. Turning it over the Feds means failure.

  3. jswap says:

    “Bottom line, the Fed continues to believe that pinning rates at near zero is the cure all and seem to ignore the experience so far in the US and certainly what Japan has gone thru. This is NOT economic stimulus as they seem to think.”

    So, you must also believe that raising rates would not be a brake on the economy.
    You are in la la land.

  4. Today’s FRB targets are generally consistent long term economic growth projections. TRI quantification of last week’s forward-looking data suggests GDP is on a trajectory rising from a o.9% pace in March (Q1) to 2.9% in September, the latter being the final BEA announcement in the days prior to the Nov 6th Election. This is opportune for the incumbent celebrity President as the model presently projects a secular decline in GDP for the balance of the business cycle … perhaps signalling resignation as to the likelihood of his re-election. GDP wanes to 1.9% by 2017Q4.

    TRI chart: http://trendlines.ca/free/economics/RecessionIndicatorUSA/USA-TRI.htm

  5. QuasiYoda says:

    jswap believing one tactic will not work does not mean that one believes the opposite will . . . You assume way to much.

    Seems to me the USA has an Astronomically Absurd Debt Level it is unserviceable at normalized interest rates but at almost nonexistent interest rate levels it can be maintained until that sham is broken. So the Fed is doing the only thing it can do . . . . At least as far as the federal debt is concerned . . .

    Just another finger in the Dyke