Home NewsDecoding Fed Statement: Recession Expected to Widen to 2014

Decoding Fed Statement: Recession Expected to Widen to 2014

Published by Charlene on 25 January 2012.

Can you tell what the FEDs are really saying? Even economist and experts were confused, stocks crashed then rebounded. But Charlene on Green breaks it down for you line by line, read Charlene's translation...

Federal Reserve Statement - Jan. 25, 2012	Charlene on Green Translation
Information received since the Federal Open Market Committee met in December suggests that the economy has been expanding moderately, notwithstanding some slowing in global growth.	It could be worst.
While indicators point to some further improvement in overall labor market conditions, the unemployment rate remains elevated.	Expect more job losses or less new jobs.
Household spending has continued to advance, and the housing sector remains depressed.	Foreclosers about to flood the market. Home values are going drop lower.
but growth in business fixed investment has slowed,	No incentive to start or grow a business.
Inflation has been subdued in recent months, and longer-term inflation expectations have remained stable.	Inflation is inevitable.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability.	Two conflicting goals. Feds are not in the business of employing anybody.
The Committee expects economic growth over coming quarters to be modest and consequently anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate.	Don't expect to create any net new jobs any time soon.
Strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee also anticipates that over coming quarters, inflation will run at levels at or below those consistent with the Committee's dual mandate.	Blame everybody else for bad decisions.
To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy.	Mombo jumbo
In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--	US Dollar real value is down to 0.75 cents to the dollar.Time to WITHDRAW money out of bank, plant it under a tree. Yes money does grow on trees. Price of lumber going up, as dollar value drops.
including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.	Good time for interest only loans or ARM loans (if the banks decide you deserve it).
The Committee also decided to continue its program to extend the average maturity of its holdings of securities as announced in September.	Don't make any plans to go on vacation. Short term trading the best bet until 2014. Gold a solid investment more than ever.
The Committee is maintaining its existing policies 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.	Keeping doing the same WRONG thing expecting a BETTER result. Or is it intentional to drive US DEBT through the roof, somebody else will pay for it later, not my problem today? American goes on sale, LOWEST bidder wins.
The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate to promote a stronger economic recovery in a context of price stability.	More stimulus, print more money, kick the can pass 2013 to 2014, tunnel vision.