Wednesday, August 12, 2009

For what it's worth..(FOMC minutes)

AlphaNinja - Always fun watching the market whip around after the FOMC statement is released. Stocks dipped, then rose, and are now sliding gradually down. As expected, rates were unchanged and they have no inclination to increase them anytime soon.

Some of the comments:

--Information received since the Federal Open Market Committee met in June suggests that economic activity is leveling out.
--Conditions in financial markets have improved further in recent weeks.
--Household spending has continued to show signs of stabilizing but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit.
--Businesses are still cutting back on fixed investment and staffing but are making progress in bringing inventory stocks into better alignment with sales.

They use terms like "leveling out," "signs of stabilizing," "making progress." Things are still worsening, but like everyone else, the FOMC is excited about the slowing of the decline. That is NOT enough to argue for a rebound.

--Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.
--The prices of energy and other commodities have risen of late. However, substantial resource slack is likely to dampen cost pressures, and the Committee expects that inflation will remain subdued for some time.

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