[lbo-talk] FOMC statement [silly question]

Doug Henwood dhenwood at panix.com
Tue Dec 14 19:29:26 PST 2004


Leigh Meyers wrote:


>"The Committee perceives the upside and downside risks to the
>attainment of both sustainable growth and price stability for the
>next few quarters to be roughly equal."
>
>Unhh.. Doesn't this mean the odds be 50/50 for sustainable
>growth and/or price stability over the next year +- ?

This language is intended, and read, as a clue about where the Fed is leaning - towards anxiety about inflation (which means tightening) or anxiety about excessively slow growth (which means cutting). So, they're raising interest rates to bring them to a more "normal" level, but not in any kind of panic mode about rising inflation. If they dropped this language while raising rates it would have signalled a more hawkish stance. That they kept it meant steady as she goes.

Doug



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