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By Gregory Taggart, March 27, 2011 2:22 pm

Due to malware problems, I didn’t post on the Fed’s most recent FOMC statement. Here it is. Nothing changed; that is, the federal funds target rate will remain in the 0 to 1/4 percent range, and the Fed will continue to purchase Treasuries pursuant to QEII. That said, there was this interesting snippet (emphasis mine):

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Currently, the unemployment rate remains elevated, and measures of underlying inflation continue to be somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate. The recent increases in the prices of energy and other commodities are currently putting upward pressure on inflation. The Committee expects these effects to be transitory, but it will pay close attention to the evolution of inflation and inflation expectations. The Committee continues to anticipate a gradual return to higher levels of resource utilization in a context of price stability.

What they’re talking about here is the Phillips Curve, which says that with low inflation comes high unemployment. Conversely, higher inflation brings lower unemployment.

In the present case, the FOMC doesn’t think the upward pressure on inflation will be lasting; thus, the committee anticipates that the employment picture will improve, but only gradually. And, it appears, that improvement will will not come because of an increase in the federal funds target rate–not anytime soon anyway.

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By Gregory Taggart, January 26, 2011 2:50 pm

Here it is

The two key statments:

To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to continue expanding its holdings of securities as announced in November. In particular, the Committee is maintaining its existing policy of reinvesting principal payments from its securities holdings and intends to purchase $600 billion of longer-term Treasury securities by the end of the second quarter of 2011.

and

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, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period.

All emphasis mine.

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By Gregory Taggart, January 26, 2011 11:55 am

Today, I begin watching the Fed. The FOMC began its January meeting yesterday and ends today. According to Bloomberg,

The FOMC announcement for the January 25-26 FOMC policy meeting is expected to leave the fed funds target rate unchanged at a range of 0 to 0.25 percent. Market focus will be on any update on the current round of quantitative easing and if there are any upgrades on the economy.

The announcement should come later today. Then we’ll see how the consensus holds up.