Press Coverage of FOMC Minutes

May 22, 2008

The Financial Times, Wall Street Journal and New York Times found essentially the same message in minutes from the April 30th meeting. The operative mode of policymaking these days is balancing conflicting priorities, and that translates into a freeze on the present policy for quite sime time. The balancing act has two dimensions, first between weaker-than-desired growth and higher-than-acceptable inflation and, secondly, between different relative weights attached to these dangers by the different Federal Open Market Committee members. The NYT claims, “the minutes revealed deep divisions among the bankers,” and the FT offers an almost identical observation: “The minutes reveal considerable disagreement within the Fed as to the balance of risks and the appropriate stance of monetary policy.” Those officials looking at inflation-adjusted policy rates felt the Fed’s stance is now quite accommodative. Others observing abnormally tight lending conditions believe otherwise. The Journal’s sub-header sums up the present paralysis in policy: “Double Whammy: Moribund Growth, Inflation’s Threat.”

The Fed merely joins other central banks, whose benchmark rates haven’t moved for quite some time. The last change in ECB rates occurred June 5, 2007. Some other dates for the last policy changes are February 21, 2007 for the Bank of Japan, July 26, 2007 for the Reserve Bank of New Zealand, September 13, 2007 for the Swiss National Bank and December 20, 2007 for the People’s Bank of China.



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