At its May meeting, the Federal Open Market Committee (FOMC) maintained its target for the federal funds rate at 5-1/4 percent. The Committee’s accompanying statement noted that economic growth slowed in the first part of the year and that the adjustment in the housing sector was ongoing. Nevertheless, the economy seemed likely to expand at a moderate pace over coming quarters. Core inflation remained somewhat elevated. Although inflation pressures seemed likely to moderate over time, the high level of resource utilization had the potential to sustain those pressures. The Committee's predominant policy concern remained the risk that inflation would fail to moderate as expected. Future policy adjustments would depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.
The Fed has been saying the same thing for about 6 months now. No one should be surprised by this statement.
1 comment:
With folks crowing about the 14K DJIA, I wonder if this business about the Fed and inflation isn't just a red herring of sorts.
If we're really in a global economy, then a buck represents a certain amount of capital in every country.
If there is such a thing as "investment bang for buck" inflation, then we're in very bad territory indeed--and 14K, in effect a measure of capital worth, is nothing to crow about. It might be if we still had an 80 cent Euro.
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