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The Federal Reserve Open Market Committee meeting concluded just a short time ago and, as widely expected, short-term interest rates were left unchanged. There were, however, a few interesting changes to the policy statement.

Actually, the changes from last time are more than just interesting - they really scream "stagflation". Here are the last two statements side-by-side. [click to enlarge]

Economic growth goes from "somewhat firmer" to "mixed" and "tentative signs of stabilization" in the nation's housing is now termed an "adjustment" that is "ongoing".

Oh Dear! Maybe that wasn't the bottom for housing.

The inflation data since the last meeting was probably the most disappointing development where back-to-back 0.3 and 0.2 monthly increases to the core rate have caused the inflation monster to pop its head back up and look around to see what kind of trouble it can cause.

What in January was characterized as having "improved modestly" has gone back to "somewhat elevated". From "some inflation risks remain", a hawkish shift is now evident where the group's "predominant policy concern remains the risk that inflation will fail to moderate". Oh Dear! There is more work to do before the inflation monster is vanquished.

Some currency traders reacted to the news, though it's impossible to tell whether it's the weaker growth of higher inflation that has upset them so.

Source: FOMC Statement Changes Scream Stagflation