After saying that economic growth remains slow in Sept, the FOMC today said “growth strengthened somewhat in Q3, reflecting in part a reversal of the temporary factors that had weighed on growth earlier in the year.” They also cited household spending that “increased at a somewhat faster pace in recent months.” Other comments on the economy are similar to the Sept statement. On inflation, they still have no worries and said again “inflation appears to have moderated since earlier in the year as prices of energy and some commodities have declined from their peaks.” Thus, the Fed is on record saying that $93 crude oil is not inflationary because its below its 2011 high of $115. They should explain that to main street. On OT and MBS purchases, they remain on track with what as announced in Sept. Evans, wildly dovish, wanted more accommodation and that reveals nothing new about him as he hinted at it in a talk a few weeks ago. What he thinks more accommodation will do is worth asking but Turullo, Dudley and Yellen are close to QE3 too and be sure Bernanke is also. QE3 is thus a matter of time, not if with this Fed.
Two more things on the FOMC. With all the tough talk from Fed Pres Fisher on current Fed policy and his stated distaste for QE2, timeline on a near zero fed funds rate and OT, he decided not to dissent today. Neither did Plosser and Kocherlakota. Thus, any hawkishness and reservations that they have expressed with their previous dissents doesn’t square with their vote for current policy. Also, with Bernanke’s press conference, the Fed will reveal new economic forecasts on growth and inflation for the next few years but if there is one thing everyone should know by now, never pay attention to them because they are rarely correct.