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March 22, 2005
FOMC statement
Read it here. I was wrong (though I was certainly not alone) in thinking that the word "measured" would be missing.
It's still there.
Can't wait for the minutes.
Can't wait to see what this does to fed funds futures (not to mention other markets).
Will the dollar fall in late trading? I suppose so.
Right now I need to teach a class on this stuff. Back in a couple hours.
UPDATE: I didn't catch this before I had to run to class, but Kash at Angry Bear did. The wording of the press release does contain a nugget for the inflation hawks.
Output evidently continues to grow at a solid pace despite the rise in energy prices, and labor market conditions continue to improve gradually. Though longer-term inflation expectations remain well contained, pressures on inflation have picked up in recent months and pricing power is more evident. The rise in energy prices, however, has not notably fed through to core consumer prices.
They are careful to say that "longer-term inflation expectations" or "underlying inflation" are expected to be contained. They also do say that
The Committee perceives that, with appropriate monetary policy action, the upside and downside risks to the attainment of both sustainable growth and price stability should be kept roughly equal.
How will the markets take these words. Will they interpret this action favorably? Kash at Angry Bear has a chart that shows that the bond market took a dive. They apparently don't like the word measured. The whole tone of the thing seems weaker than what the market was expecting.
More to come...
Posted by William Polley at March 22, 2005 1:19 PM
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