FOMC Minutes Show Board Split - Support My Inflationary Outlook

Wednesday, October 14, 2009

The latest FOMC Minutes from the September meeting of the Fed support my inflationary fears. While showing a rift between hawks and doves the Fed makes it clear that it will remain on the (fantasy) bid for whatever dead investment instrument comes along.
The Fed's staff forecasts is bullish as ever:
The information reviewed at the September 22-23 meeting suggested that overall economic activity was beginning to pick up...
In the forecast prepared for the September FOMC meeting, the staff raised its projection for real GDP growth over the second half of 2009 and over 2010.
The participants current outlook confirm that the Fed is a boat drifting in the mist of data. It does not sound too optimistic fine-reading this FOMC quote:
Despite these positive factors, many participants noted that the economic recovery was likely to be quite restrained.
followed by lingering fears of inflation despite a contraction in money supply M2.
A few continued to see some risk of substantial further disinflation, but that risk had eased somewhat further over the intermeeting period. Over a longer horizon, a few felt the risks were tilted to the upside.
OK, this comes long after the admission that the Fed mainly tries to contain expectation inflation expectations - all the time padding their own shoulder to have been successful on this front in the past.
It does not change my view that surging commodity prices will surprise the world within the next 12 months, re-charging inflation again with oil buldifing a base above $70 a barrel.

1 comment

Anonymous said...

Good evening!
Happy New Year!
Health, luck and love!

26 January, 2012 18:04

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