The FOMC commentary on the economy and inflation is pretty much unchanged from the statement they gave in Dec. They continue to believe the economy has been expanding moderately, notwithstanding some slowing in global growth. The only real change of substance was they replaced the time frame of keeping rates ‘exceptionally low’ from mid 2013 to late 2014. This squares with an extremely dovish Fed where 2 of the 3 new members are so and now 8 of the 10 voting members are. Lacker, a new voting member and one of the 2 remaining hawks, dissented and didn’t want to specify the time frame. Bottom line, the Fed continues to believe that pinning rates at near zero is the cure all and seem to ignore the experience so far in the US and certainly what Japan has gone thru. This is NOT economic stimulus as they seem to think. Also, calling for where rates will be by late 2014 is a waste as anything can change in economic growth and inflation well before then. What the Fed is trying to do is jawbone the yield curve with their words.
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