The FOMC Statement due out at 2pm will continue in the Fed's fine tradition of keeping most of the text unchanged and merely updating key sections that help evolve the policy over time. Wouldn't it be more fun if we got to make our own updates? With that in mind, it's time once again to play "Build Your Own Fed Statement". It's easy to win, just choose your favorite answers from the bold options below:
Information received since the Federal Open Market Committee met in
September generally suggests that economic activity has continued to (expand at a moderate pace; bewilder and confound CNBC pundits; survive protracted legislative shenanigans).
Indicators of labor market conditions have shown some further
improvement, but the unemployment rate remains elevated. Available data
suggest that household spending and business fixed investment advanced,
while the recovery in the housing sector slowed somewhat in recent
months (as evidenced by loan officers' rapidly dwindling cash
reserves; as higher mortgage rates "shockingly" impacted housing
sales; leading many Realtors to pursue seasonal employment at local big
box retailers). (Fiscal policy; Congressional gridlock and dysfunction; Rampant public
consternation over Affordable HealthCare Act) is
restraining economic growth. Apart from fluctuations due to changes in
energy prices, inflation has been running below the Committee's
longer-run objective, but longer-term inflation expectations have
remained stable.
Consistent with its statutory mandate, the Committee seeks to foster (maximum employment and price stability; peace on earth, good will to men; economic Nobel Prizes for Committee members). The Committee expects that, with appropriate policy accommodation, economic growth will pick up from its recent pace (at
some point in the distant future or sooner; since equities continue to
gain 20% annually; should Mike Shanahan receive his anticipated buyout) and the unemployment rate will gradually decline (with
the exception of certain current NFC East head coaches; unless
UPS conducts mass layoffs due to Amazon Drone Deliveries; as pizza sales
soar for WA and CO "herb" enthusiasts) toward levels the Committee
judges consistent with
its dual mandate. The Committee sees the downside risks to the outlook
for the economy and the labor market as having diminished, on net, since
last fall (as Congress appears poised to actually pass a bipartisan
budget plan; since even unqualified, schizophrenic sign language
interpreters can gain employment; due to burgeoning IT hiring following
HealthCare.gov's launch debacle). The Committee recognizes that
inflation persistently below its 2 percent objective could pose risks to
economic performance, but it anticipates that inflation will move back
toward its objective over the medium term.
Taking into account the extent of federal fiscal retrenchment over
the past year, the Committee sees the improvement in economic activity
and labor market conditions since it began its asset purchase program as
consistent with growing underlying strength in the broader economy.
However, the Committee decided to await more (evidence that progress will be sustained; Edward Snowden leaks on NSA's FOMC surveillance; imaginative Miley Cyrus videos) before
adjusting the pace of its purchases. Accordingly, the Committee decided
to continue purchasing additional agency mortgage-backed securities at a
pace of $40 billion per month and longer-term Treasury securities at a
pace of $45 billion per month (in light of FHFA's looming "risk
based pricing adjustments; to build further anticipation for release of
next Fed Minutes; solely because we can). The Committee is maintaining
its existing
policy of reinvesting principal payments from its holdings of agency
debt and agency mortgage-backed
securities and of rolling over maturing Treasury securities (at auction; into bitcoin futures; on Atlantic City keno investments).
Taken together, these actions should maintain downward pressure on
longer-term interest rates, support mortgage markets, and help to make
broader financial conditions more accommodative, which in turn should
promote a stronger economic recovery and help to ensure that inflation,
over time, is at the rate most consistent with the Committee's dual
mandate.
The Committee will closely monitor incoming information on (economic and financial developments; point spread changes for BCS Championship Game; freeze resistant Manhattan cockroaches)
in coming months and will continue its purchases of Treasury and agency
mortgage-backed securities, and employ its other policy tools as
appropriate, until the outlook for the labor market has improved
substantially in a context of price stability. In judging when to
moderate the pace of asset purchases, the Committee will, at its coming
meetings, assess whether incoming information continues to support the
Committee's expectation of ongoing improvement in labor market
conditions and inflation moving back toward its longer-run objective. (Asset purchases; Committee Christmas gift expenditures; The current
chairman's retirement compensation packages) are not on a preset
course, and the Committee's decisions about their pace will remain
contingent on the Committee's economic outlook as well as its assessment
of the likely efficacy and costs of such purchases.
To support continued progress toward maximum employment and price
stability, the Committee today reaffirmed its view that a highly
accommodative stance of (monetary policy; generous holiday tips for domestic staff; aggressive Mega Millions lottery ticket purchases) will
remain appropriate for a considerable time after the asset purchase
program ends and the economic recovery strengthens. In particular, the
Committee decided to keep the target range for the federal funds rate at
0 to 1/4 percent and currently anticipates that this exceptionally low
range for the federal funds rate will be appropriate at least as long as
the unemployment rate remains above 6-1/2 percent, inflation between
one and two years ahead is projected to be no more than a half
percentage point above the Committee's 2 percent longer-run goal, and
longer-term inflation
expectations continue to be well anchored. In determining how long to
maintain a highly accommodative stance of monetary policy, the Committee
will also consider other information, including additional measures of
labor market conditions, indicators of inflation pressures and inflation
expectations, and readings on financial developments. When the
Committee decides to begin to remove policy accommodation, it will take a
balanced approach consistent with its longer-run goals of (maximum
employment and inflation of 2 percent; complete New World Order global
power; replacing legislative branch of federal government with Committee
controlled cyborgs).