Fed Watch: The Pause That Refreshes

Another Federal Reserve meeting has come and gone, and the federal funds rate holds steady at 5.25 percent:

The moderation in economic growth appears to be continuing, partly reflecting a cooling of the housing market.

Nonetheless, the Committee judges that some inflation risks remain. ....

What's most freaky about this terse statement is how it is a nearly verbatim replay of what happened last month, right down to Jeffrey Lacker's insistence that "inflation-fighting credibility" is more important than, y'know, sound economic policy. The man lives up to his name.

More coverage from AP via Yahoo, emphasizing the softness of the housing market and its potential to cause future hikes. For more of a Lacker-esque viewpoint, peep this Reuters article on the horrors a surprise rate hike would wreak on that all-important Fed credibility.

Posted at September 20, 2006 04:29 PM

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Another Federal Reserve meeting has come and gone, and the federal funds rate holds steady at 5.25 percent: The moderation in economic growth appears to be continuing, partly reflecting a cooling of the housing market. Readings on core inflation have been elevated, and the high levels of resource utilization and of the prices of energy and other commodities have the potential to sustain inflation pressures. However, inflation pressures seem likely to moderate over time, reflecting reduced impetus from energy prices, contained inflation expectations, and the cumulative effects of monetary policy actions and other factors restraining aggregate demand. Nonetheless, the Committee judges that some inflation risks remain. .... What's most freaky about this terse statement is how it is a nearly verbatim replay of what happened last month, right down to Jeffrey Lacker's insistence that "inflation-fighting credibility" is more important than, y'know, sound economic policy. The man lives up to his name. More coverage from AP via Yahoo, emphasizing the softness of the housing market and its potential to cause future hikes. For more of a Lacker-esque viewpoint, peep this Reuters article on the horrors a surprise rate hike would wreak on that all-important Fed credibility.