My kids were excited that it was Fed Day
I mentioned in passing to the wife last night that today was Fed Day. Little did I expect this statement to catch the ears of my kids who are in 5th and 3rd grade. They immediately perked up and asked “tomorrow is Fed Day?” I was shocked. Most adults don’t know what Fed Day is, yet public schools are apparently teaching elementary school kids about monetary policy now-a-days. Maybe there is hope for the future.
So I acknowledged that yes…tomorrow is Fed Day. They then asked me if they got the day off from school. I was far too eager to give them credit for learning about monetary policy…they simply heard something that sounded like an official holiday and they didn’t want a day off to get past them. They were the only people I ran into that were excited about Fed Day…and ultimately it even let them down.
It was easy to forget that today was Fed Day. It’s been so predictable for so long that it’s difficult to maintain any level of suspense over the next statement from the Fed. Today they voted to again keep the overnight rate “exceptionally low for an extended period of time”. This time however, it was a unanimous decision…there was no dissent. For as long as I can remember Tom Hoenig has dissented against the opinion of his fellow Fed members. His voice will no longer be heard. He has rotated off the list of voting members.
There are four new voting members and there was some speculation as to how these new voices would sound on voting day. They sounded off in unison today in support of the Feds current plan. As of today the Fed will keep rates low and they will continue with QE2. I picture a room full of Fed governors that is a little more relaxed this time around. There are four new members to chat with and nobody has to make an effort to avoid eye contact with Hoenig, or to suffer through another one of his speeches outlining his opposition to the rest of the group.
The Statement
The short story is that our “recovery” isn’t moving quickly enough. Unemployment is still too high, long term inflation is stable, core inflation is still decelerating, housing still stinks, credit is still tight, and household wealth is still depressed. Those are not ingredients in a recipe for monetary tightening.
The next FOMC meeting is on 3/15/11. As always the Fed will continue to monitor the data as they come in and will re-evaluate their plans as needed. Until then we’ll have to live with the exceptionally low rates for an extended period. If you have any questions or if there is anything I can be doing for you just let me know.
The full FOMC statement is attached.
Regards,
Steve Scaramastro, SVP
800-311-0707
Posts
No comments:
Post a Comment