Build Your Own Fed Statement

Parsing the Fed is everyone's favorite game, so before the Fed wraps its fifth meeting of 2013 this afternoon, it's time to play "Build Your Own Fed Statement!" It's easy to win, just choose your favorite answers from the bold options in the Ted Statement below.

Information received since the Federal Open Market Committee met in May suggests that (economic activity; MLB trading deadline drama; looming angst among Red Sox and Cardinals fans) has been expanding at a moderate pace. (Labor market conditions; renewed Twinkie supplies; Detroit municipal legal fees) have shown further improvement in recent months, on balance, but the (unemployment rate; distress levels for volume challenged lenders; A-Rod drama) remains elevated. Household spending and business fixed investment advanced, and the housing sector has strengthened further, but fiscal policy is (restraining economic growth; disjointed per usual; coherent for imaginative economists).  Partly reflecting (transitory influences; plummeting loan officers' payrolls; dwindling Biogenesis revenues), inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to (foster maximum employment and price stability; ensure its legacy for posterity; achieve certain post term Ivy League employment). The Committee expects that, with appropriate (policy accommodation; rampant federal spending; Wolverine box office receipts), economic growth will proceed at a moderate pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. The Committee sees the downside risks to the outlook for the economy and the labor market as having diminished since the fall. The Committee also anticipates that (inflation; congressional approval ratings; Milwaukee Brewers' miniscule playoff prospects) over the medium term likely will run at or below its 2 percent objective.

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee decided to continue purchasing additional agency mortgage-backed securities (at a pace of $40 billion per month; should any become available; solely to occupy MBS analysts) and longer-term Treasury securities at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over (after hitting the snooze alarm each morning; maturing Treasury securities at auction; all lottery winnings to next drawing). Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions (more accommodative; less comatose; strong enough to weather the next debt ceiling crisis). 

The Committee will closely monitor incoming information on (economic and financial developments; Carlos Danger's unique campaign communications; Ryan Braun's endorsement prospects) in coming months. The Committee will continue its purchases of (Treasury and agency mortgage-backed securities; delicious Ding Dongs;  survival gear for apocalypse created by rising rates), and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes. In determining the size, pace, and composition of its asset purchases, the Committee will continue to take appropriate account of (the likely efficacy and costs of such purchases; our retirement portfolios first and foremost; Jets' post Tebow Super Bowl odds) as well as the extent of progress toward its economic objectives.

To support continued progress toward maximum (employment and price stability; CNBC viewership; big bank profit margins), the Committee expects that a highly accommodative stance of (monetary policy; Fed loans to Committee Members; 12 months "same as cash" furniture financing) will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee's 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. When the Committee decides to begin to remove policy accommodation, it will (take a balanced approach; issue an expertly equivocal press release; first sell all personal bond holdings) consistent with its longer-run goals of maximum employment and inflation of 2 percent.