FOMC Statement Doesn’t Rock the Boat

October 30, 2013

Today’s statement from the FOMC announces no changes in policy settings and the same forward guidance as before.  One finds in the document very few modifications from the previous statement released September 18.  Here are four.

  1. The word “generally” has been added to the assertion that information since the prior meeting suggests economic activity has continued to expand at a moderate pace.  The added word connotes marginally less confidence in the conclusion.
  2. The October statement notes that housing sector activity “slowed somewhat in recent months.”  Before officials were saying that housing “has been strengthening.”
  3. A clause in the September document only about tightening financial conditions possibly slowing future improvement has been deleted.
  4. A time dimension “over the past year” was added to the observation of federal fiscal retrenchment.

A majority of analysts, myself included, do not see a cut in quantitative stimulus happening before March because December’s meeting is in the middle of the holiday shopping season, the following meeting happens near the handoff of the chairmanship, and because it will take that long to filter out distortions from this month’s government shutdown from incoming information about the economy.  Hopefully, further fiscal money business will be avoided.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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