Brace yourselves, it appears more inflation and stagnation is just beyond the horizon.
Diane Swonk chief economist at Mesirow Financial, suspects the minutes of the meeting, which will be released in three weeks, will reveal some
concerns members hold about the budget issues' impact on the economy.
"The Fed is very cognizant about how it characterizes the economy," Swonk said. "They are worried about a self-fulfilling prophecy of talking the
economy down too much."
The statement was approved on an 11-1 vote. Esther George, the president of the Federal Reserve Bank of Kansas City, cast the lone dissenting vote.
George, who is a new voting member, expressed concerns about the risk of higher inflation caused by the Fed's aggressive policies.
In December, the Fed signaled for the first time that it will tie its policies to specific economic barometers. Fed Chairman Ben Bernanke made clear
during a news conference that even after unemployment falls below 6.5 percent, the Fed might decide that it needs to keep stimulating the economy.
Other economic factors will also shape its policy decisions, he said.
The guidance was designed to give consumers, companies and investors a clearer sense of when super-low borrowing costs might start to rise.
The Fed also said it would continue its bond purchases until the job market improved "substantially."
When it buys bonds, the Fed increases its investment portfolio and pumps more money into the financial system — something critics (myslf included)
say could eventually ignite inflation or create dangerous bubbles in assets like real estate or stocks.
(visit the link for the full news article)
edit on 1/30/2013 by tothetenthpower because: --Mod Edit--All Caps Don't use Them
edit on 1/30/2013 by tothetenthpower because: --Mod Edit--BAN requries you use the exact headline.