OK, so I’m torn between these interpretations of the gist of the FOMC Statement.
This is what the statement said (in part):
The Committee currently anticipates that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.
This is the interpretation from Paul Krugman:
if the economy stays weak, rates will stay low — well, duh —
Pithy & accurate.
A more nuanced interpretation is from one of my favourite economic commentators (put this guy on your reading list, well worth it), The Capital Spectator:
There’s been an acute shortage of macro clarity in recent days–yes, more so than usual–and so the Federal Reserve this afternoon made a bold effort to enhance the focus, albeit on the one front it can control. “The Committee currently …”
It’s not QE3, which some analysts advocate, but it’s ambitious in the sense that the central bank is telling us what monetary policy will be for the next two years. That’s the equivalent of a politician telling you how he’ll vote in 2013. You want clarity? You’ve got it, at least as Fed machinations go. Whether it’ll help is another question, but there’s no question that’s it’s audacious.
There is more, and its worth reading the whole (short) article.
I’m not really torn, The Capital Spectator just elaborates on Krugman’s words a little more. But I really wanted to link to Krugman’s “- well, duh -” quote. LOL.
Meanwhile, European Bonds are no longer plummeting (unfortunately for the doomers the actions of the ECB are having the expected effect), the TED spread is coming in, the VIX is lower, the AUD is up …. oh, I’ll stop, suffice it to say that all of the signposts the tin hat morons quote for the end of the world are not playing along for them today. Look on the bright side chaps, you had a few days to crow “I told ya so!” at least. Shame it didn’t happen closer to Christmas so you could bore the bejeezeus out of the family with your rantings.