The Weirdest FOMC Day in History... Did Anyone Else Feel That?
The Yankees won their 27th World Series? News to me.
FOMC Day from around the blogosphere. My wrap up is here. Also, happy year anniversary to my killer bunny tattoo, which I am proud to report I ran out to the Peninsula to get just hours after Barack Obama won the election. Biting my tongue now, thanks.
Federal Reserve officials signaled a return to economic growth alone won’t warrant higher interest rates, saying an increase will instead depend on when the labor market and inflation pick up.
The Fed’s rate-setting Open Market Committee yesterday restated its pledge to keep rates “exceptionally low” for an “extended period.” The panel added for the first time that its commitment depends on “low rates of resource utilization, subdued inflation trends and stable inflation expectations.”
The comments prompted traders to reduce bets for an increase in borrowing costs in the first half of 2010, given that policy makers are focused on reducing unemployment that’s forecast to rise above 10 percent. The dollar weakened yesterday and short-term Treasury yields fell.
Policy makers, acting the week after a report showed the U.S. economy expanded in the third quarter for the first time in more than a year, left their target for the overnight interbank lending rate unchanged at a range of zero to 0.25 percent. The vote of 10 officials was unanimous.
The conditions “put some meat on the bones” of the Fed’s rate stance, said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina.
WSJ has a better summation.
Prudent Investor called it the Fed on autopilot:
The Federal Reserve is set to continue its ZIRP (zero interest rate policy) until spring 2010. According to the statement released after the latest 2-day meeting of the Federal Open Market Committee (FOMC) the Fed kept its key interest rate unchanged at the level of 0% to 0.25%. While the Fed sees the economy picking up I stay with my opinion that US GDP is actually still contracting were it not for the unlimited spending on killing devices.
As all FOMC members voted for the continuation of doing nothing despite gold showing clearly that inflation will set in next year one can expect that inflation will surge next year to levels not seen since the 1970/80s.
Contradicting itself in one sentence I advise investors to be extremely cautious as the Fed is way too optimistic in seeing a recovery:Household spending appears to be expanding but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit.
As for Market Ticker, I am pretty sure "Its all trash but heh, it's marked to model! I pinky swear it's all worth PAR. Seriously." explains it all.
StockTwits also has a great FOMC wrap-up (and I'm right there on ripping off the band-aid):
All in all, a bizarre day. They are absolutely clueless. No idea whatsoever how to get out of this, all they can do is buy one more month.
Good luck with that, Fed boys (and trolls).