FOMC Minutes

Fomc_minutes

The new improved FOMC Minutes are out here (and in PDF version)

This is the most notable paragraph in my read:

"Participants generally agreed that the available data suggested that consumer spending had been well maintained over the past several months and that spillovers from the strains in the housing market had apparently been quite limited to date. Nevertheless, a number of participants cited notable declines in survey measures of consumer confidence since the onset of financial turbulence in mid-summer, along with sharply higher oil prices, declines in house prices, and tighter under-writing standards for home equity loans and some types of consumer loans, as factors likely to restrain consumer spending going forward. Moreover, anecdotal reports by business contacts suggested a softening in retail sales in some regions of the country. Participants expressed a concern that larger-than-expected declines in house prices could further sap consumer confidence as well as net worth, causing a pullback in consumer spending. All told, however, participants envisioned that the most likely scenario was for consumer spending to continue to advance at a moderate rate in coming quarters, supported by the generally strong labor market and further gains in real personal income."

Also noteworthy: Summary of Economic Projections on pages 9 – 16

Forecasts

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What's been said:

Discussions found on the web:
  1. mdy commented on Nov 20

    The Fed claims tame inflation with a bunch of worthless dollars sloshing around in the system, gas costing $3.50+ per gallon and a 50bp cut on the horizon as Helicopter Ben tries to goose St. Nick into sliding his fat ass down the chimney?

    Give me a break.

  2. karen commented on Nov 20

    strong labor market? further gains in personal income?

    the only way I foresee that happening is if the government hires more and more and more and pays more and more and more…

    the fed hasn’t proven itself to be very visionary.

  3. Deborah commented on Nov 20

    Inflation *down* in 2008? Is that “owner’s equivalent inflation”? The Fed’s inflation stance is on par with Paulson’s strong dollar policy.

  4. Al Czervik commented on Nov 20

    I went to the can at 3:20. Did the Fed cut by 50 while I was in there? :>)

  5. Mike M commented on Nov 20

    Hey, if the Fed says soft landing, then I’m gonna believe soft landing. Who has more credibility than the US FEDERAL RESERVE? Really. These guys are top notch in my book. Generally speaking, quasi-governmental institutions led by high ranking bureaucrats get things right most of the time. Hooray for the FED.

  6. Robert commented on Nov 20

    My money’s still betting on further rate cuts within the next six months – Hence I am still heavy in gold and silver stocks.

  7. Estragon commented on Nov 20

    There’s a nugget of info in this sentence:

    Participants’ projections for PCE inflation in 2009 and 2010 were
    importantly influenced by their judgments about the measured rates of inflation consistent with the Federal Reserve’s dual mandate to promote maximum employment and price stability and about the time frame over which policy should aim to attain those rates given current economic conditions

    If I’m reading this correctly, they’re setting a defacto target of 1.6-1.9% for both core and total PCE inflation, and see an effective lead time of around 2 years for monetary policy. This isn’t really new news, but it seems to confirm what many already thought.

    That they see unemployment staying around current levels with a slowing economy and falling inflation suggests moderate easing into mid-2008, but they’re really saying there’s nothing they can do about 2008. Moves will happen with 2010 in mind.

  8. Michael Donnelly commented on Nov 20

    should the range of projections grow wider in the out years? You might have an idea that CPI should be between 2 and 3 next year, but if you are honest the range of projections for 2010 should be larger like 1 to 4, then use the central tendency to maintain a more narrow band.

    Gregg Easterbrook has done good writing at ESPN page 2 on this sort of subject. The idea of hyperaccuracy. Oh Running Back 1 runs the 40 in 4.41 seconds and running back 2 runs it in 4.45 ? Running back 2 is worthless, then Easterbrook reminds us that the difference in the distance traveled over those 40 yards is something like a couple of inches. Like it matters.

    If the Fed wanted to be more realistic and honest they’d widen the projections.

  9. Michael Donnelly commented on Nov 20

    Sorry! Add n’t

    shouldn’t the range of projections grow wider in the out years?

  10. MS commented on Nov 20

    It looks like that the market will ralley from here. But will this sustainable?

  11. 12th percentile commented on Nov 20

    This one will be fun to revisit.

    All told, however, participants envisioned that the most likely scenario was for consumer spending to continue to advance at a moderate rate in coming quarters, supported by the generally strong labor market and further gains in real personal income.”

  12. David commented on Nov 20

    Barry,
    FOMC Minutes: “the word that cannot be spoken”, Stagflation.

    Stagflation:

    “In my most ill-composed affection such
    A stanchless avarice that, were I king,
    I should cut off the nobles for their lands, Desire his jewels and this other’s house. And my more-having would be as a sauce To make me hunger more, that I should forge Quarrels unjust against the good and loyal, Destroying them for wealth.” William Shakespeare- Macbeth

  13. Eclectic commented on Nov 21

    Barringo,

    It’s beginning to look like the Fed Funds rate is drifting out of touch with reality.

    http://www.cnbc.com/id/15839203/site/14081545/

    I suspect we’ll soon get another bansee wail from Cramer about the Fed. I’m surprised he didn’t do it today.

Read this next.

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