A Closer Read of the FOMC Release
The near-universal response from Wednesday's Federal Open Market Committee release, which included the quarterly projections update, was that it was surprisingly hawkish and that it implied a Federal Reserve that is more optimistic on the economy. I admit, that was my knee-jerk reaction as well. But after crunching the numbers and parsing the words a little more in depth, I'm coming to a more nuanced conclusion.
In order to properly interpret the FOMC's economic projections, we need to bear in mind the FOMC's actual make-up. We know that three members (Plosser, Lacker and Fisher) are anxious about inflation now and want to see the Fed moving toward policy normalization immediately. Whatever you think of their arguments, we know they are the minority. It would be a mistake to overweight their influence on the group. Then we have three board members who are not economists (Bloom Raskin, Duke and Tarullo) and who have expertise in banking regulation. They have historically always voted with Chairman Ben Bernanke....675 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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