zermux

Fed Sez: No Changes

Given the fact that CNBC are unable to be proper journalists anymore I thought I would translate the FOMC statement into realspeak. Hopefully I won’t get into trouble for thought crime…..

“Information received since the Federal Open Market Committee met in April suggests that the pace of economic contraction is slowing. ” – We have injected trillions of dollars into the market, equivalent to putting a dying person onto life support. The patient has not died yet and is still breathing.

“Conditions in financial markets have generally improved in recent months.” – See above.

“Household spending has shown further signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. ” - Consumers are spending significantly less and are scared about losing their job, negative equity and cannot borrow any more money. Scared people spend less.

“Businesses are cutting back on fixed investment and staffing but appear to be making progress in bringing inventory stocks into better alignment with sales.” - Inventories are going to be lower than in previous years, because people have stopped buying things.

“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. ” – We have no idea what is going to happen.

“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.” – We are still shit scared of deflation.

“In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. ” – The tool cupboard is looking a bit empty as we have now tried everything and it didnt really work that well.

“The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. ” – We will continue to keep our head in the sand.

“As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.” – We might have to be even more irresponsible if people realize that a major deflationary depression is really on the cards.