The Federal Reserve left interest rates unchanged. The FOMC Statement reads as follows:
The Federal Open Market Committee decided today to keep its target for the federal funds rate at 1 percent.
The Committee continues to believe that an accommodative stance of monetary policy, coupled with robust underlying growth in productivity, is providing important ongoing support to economic activity. The evidence accumulated over the intermeeting period confirms that output is expanding briskly, and the labor market appears to be improving modestly. Increases in core consumer prices are muted and expected to remain low.
The Committee perceives that the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal. The probability of an unwelcome fall in inflation has diminished in recent months and now appears almost equal to that of a rise in inflation. However, with inflation quite low and resource use slack, the Committee believes that policy accommodation can be maintained for a considerable period.
Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Ben S. Bernanke; Susan S. Bies; J. Alfred Broaddus, Jr.; Roger W. Ferguson, Jr.; Edward M. Gramlich; Jack Guynn; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; and Robert T. Parry.
Now, I don't know about you, but if there was ever a case of trying to be two-faced, this must be it. On one hand, the FOMC had to leave the "policy accommodation can be maintained for a considerable period" statement in there to keep their promise. On the other hand, they hint that things are getting better by changing the tilt to "upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal".
We are not surprised by this stance. As discussed last week, I am sure this is their plan, to let the market do the tightening. Best to let supply and demand dictate anyway.
03.12.09 14:48 #