Build Your Own Fed Statement

It's time to play "Build Your Own Fed Statement" It's easy to win, just choose your favorite answers from the bold options.

Information received since the Federal Open Market Committee met in September suggests that economic activity has been expanding at a moderate pace. Some indicators of (labor market conditions ) ( NSA European surveillance) (David Ortiz' legacy among Red Sox fans) have shown further improvement in recent months, but (unemployment)(Cardinal fans' blood pressure)(congressional scrutiny of Kathleen Sebelius') remains elevated.

Household spending and business fixed investment advanced, and the housing sector has been strengthening, but mortgage rates have (risen further) (moderated after the Committee's surprise "No Taper" announcement) (allowed borrowers to use one weird trick to refinance) and (fiscal policy) (legislative dysfunction) (congressional can kicking) is restraining economic growth. Apart from fluctuations due to changes in energy prices, 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) (more source material for mocking Congress) (its legacy first and foremost). The Committee expects that, with appropriate policy accommodation, (economic growth) (iPhone sales) (mortgage related employment) will pick up from its recent 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, on net, since last fall, but the tightening of (financial conditions) (the AFC West race) (Congress' grip on reality) observed in recent months, if sustained, could slow the pace of improvement in the economy and labor market. The Committee recognizes that (inflation) (congressional approval ratings) (applicants' odds of successfully obtaining insurance on HealthCare.gov) persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term.

   

Taking into account the extent of federal (fiscal retrenchment) (finger pointing) (incessant backbiting), the Committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program a year ago as consistent with growing underlying strength in the broader economy. However, the Committee decided to await more evidence that (progress will be sustained) (Congress can function with a modicum of success) (Federal phones weren't "revenge-tapped" by Angela Merkel) before adjusting the pace of its purchases. Accordingly, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month (as homage to our future TBTF bank employers) (to annoy Rick Santelli and Ron Paul) (because that's just the way things are now) .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 maturing Treasury securities at auction. Taken together, these actions should maintain (downward pressure on longer-term interest rates) (a clear path to Bernanke's escape chopper) (Senate support for the new Committee Chairwoman), support mortgage markets, and help to make broader financial conditions more accommodative, which in turn should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee's dual mandate.

   

The Committee will closely monitor incoming information on (economic and financial developments) (Americans left uninsured or enraged by the Affordable Care Act) (plummeting consumer confidence and spending) in coming months and will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for (the labor market) (the average distance of a congressional "can kick") (the HealthCare.gov website causing more health problems than it fixes) has improved substantially in a context of price stability. In judging when to moderate the pace of asset purchases, the Committee will, at its coming meetings, assess whether incoming information continues to support the Committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective. Asset purchases are not on a preset course, and the Committee's decisions about their pace will remain contingent on the Committee's (economic outlook) (whims and fancies) (public approval ratings) as well as its assessment of the likely efficacy and costs of such purchases.

   

To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of (monetary policy) (interest free loans to Committee members) (tipping 20% while dining on Committee business) 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 equivocal yet arcane pronouncement) (first coincidently revise its personal investment strategy) consistent with its longer-run goals of maximum employment and inflation of 2 percent.