Within the minutes of the June FOMC meeting where they reviewed the economic stats seen since the prior meeting, they believed looking forward that the recovery in economic activity would be moderate thru 2011, “supported by accommodative monetary policy, an attenuation of financial stress, and strengthening consumer and business confidence.” They did say that the pace of recovery will be “somewhat slower than previously predicted” and they also reduced their expectations for both headline and core inflation slightly. Some members wanted to consider “whether further policy stimulus might become appropriate if the outlook were to worsen appreciably.” In terms of ‘helping’ the economy, I believe their gun is out of real bullets and all they got left is water. They have reached the law of diminishing returns and Fed impotence is a growing risk.
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