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The Fed in 57 Words

Here’s the full text of Wednesday’s Fed statement, plus a translation for those who don’t speak Fed.

Information received since the Federal Open Market Committee met in March suggests that the economy has been expanding moderately. Labor market conditions have improved in recent months; the unemployment rate has declined but remains elevated. Household spending and business fixed investment have continued to advance. Despite some signs of improvement, the housing sector remains depressed. Inflation has picked up somewhat, mainly reflecting higher prices of crude oil and gasoline. However, longer-term inflation expectations have remained stable.

Translation: Your lack of a job is a bigger problem than your rising bills.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects economic growth to remain moderate over coming quarters and then to pick up gradually. Consequently, the Committee anticipates that the unemployment rate will decline gradually toward levels that it judges to be consistent with its dual mandate. Strains in global financial markets continue to pose significant downside risks to the economic outlook. The increase in oil and gasoline prices earlier this year is expected to affect inflation only temporarily, and the Committee anticipates that subsequently inflation will run at or below the rate that it judges most consistent with its dual mandate.

Translation: Our plan will make things better. Or we’ll blame Europe.

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and 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 late 2014.

Translation: Expect $12 in bank interest again this year. And next year. And the one after that.

The Committee also decided to continue its program to extend the average maturity of its holdings of securities as announced in September. The Committee is maintaining its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate to promote a stronger economic recovery in a context of price stability.

Translation: If we can get you a 30-year mortgage at 3.5% fixed, will you buy a house already?


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Comments (5 of 21)

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    • Monetize the debt

    • like Eddie explained I am blown away that someone can earn $7395 in one month on the computer. have you seen this site (Click on menu Home more information)

    • When dollar becomes worthless, there will be riots and things will get ugly, real fast. We must stop Bernanke before it comes to that.

    • I can say what I think about this in Croatian in three words, but it would not comply with our host’s ‘guidelines.’

      What we have is a deliberate campaign of currency debasement / cheap money to try and make our irresponsible spending and national debt more manageable. This has been going on since going off the gold standard in 1973, and has gained momentum over time.

      This will not end well. It never does. As this is the United States, and not Argentina, it will take more time before things get ugly here.

    • Despite how many votes the fed gets for when to start increasing rates, there are a lot of factors especially related to housing to figure into this decision. Unemployment, the stock market, foreclosures, housing starts, sales time on market, availability of credit to non-prime and first time borrowers, and a host of others. Besides the fact that it’s an election year and politics will always figure in. IMHO it’s way too early to begin any serious predictions on rates over the next several years.
      I’ve been following the Mortgage Bankers Finance Forecast for nearly ten years, and only one thing is for sure… Predictions are not always accurate:


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