Redacted Version of the March 2014 FOMC Statement By David Markel CFA of alephblog

FOMC Fed FOMC Transcript 2008

January 2014 March 2014 Comments
Information received since the FOMC met in December indicates that growth in economic activity picked up in recent quarters. Information received since the FOMC met in January indicates that growth in economic activity slowed during the winter months, in part reflecting adverse weather conditions. Weather is always a weak reason for a bad result.  You almost never see anyone claim good weather boosted results.
Labor market indicators were mixed but on balance showed further improvement. The unemployment rate declined but remains elevated. Labor market indicators were mixed but on balance showed further improvement. The unemployment rate, however, remains elevated. No significant change.
Household spending and business fixed investment advanced more quickly in recent months, while the recovery in the housing sector slowed somewhat. Household spending and business fixed investment continued to advance, while the recovery in the housing sector remained slow. No significant change.
Fiscal policy is restraining economic growth, although the extent of restraint is diminishing. Fiscal policy is restraining economic growth, although the extent of restraint is diminishing. No change.  Funny that they don’t call their tapering a “restraint.”
Inflation has been running below the FOMC’s longer-run objective, but longer-term inflation expectations have remained stable. Inflation has been running below the FOMC’s longer-run objective, but longer-term inflation expectations have remained stable. No change.  TIPS are showing slightly lower inflation expectations since the last meeting. 5y forward 5y inflation implied from TIPS is near 2.56%, up 0.02% from January.
Consistent with its statutory mandate, the FOMC seeks to foster maximum employment and price stability. Consistent with its statutory mandate, the FOMC seeks to foster maximum employment and price stability. No change. Any time they mention the “statutory mandate,” it is to excuse bad policy.
The FOMC expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace and the unemployment rate will gradually decline toward levels the FOMC judges consistent with its dual mandate. The FOMC expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace and labor market conditions will continue to improve gradually, moving toward those the FOMC judges consistent with its dual mandate. Unemploys the concept of the Unemployment rate as the sole measure of labor conditions.  Maybe aggregate wages would be better.
The FOMC sees the risks to the outlook for the economy and the labor market as having become more nearly balanced. The FOMC sees the risks to the outlook for the economy and the labor market as nearly balanced. No significant change.
The FOMC recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, and it is monitoring inflation developments carefully for evidence that inflation will move back toward its objective over the medium term. The FOMC recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, and it is monitoring inflation developments carefully for evidence that inflation will move back toward its objective over the medium term. No change.  CPI is at 1.1% now, yoy.
Taking into account the extent of federal fiscal retrenchment since the inception of its current asset purchase program, the FOMC  continues to see the improvement in economic activity and labor market conditions over that period as consistent with growing underlying strength in the broader economy. The FOMC currently judges that there is sufficient underlying strength in the broader economy to support ongoing improvement in labor market conditions. Drops the language on fiscal retrenchment.  Continued overestimate of economy and labor conditions.
In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions, the FOMC decided to make a further measured reduction in the pace of its asset purchases. Beginning in February, the FOMC will add to its holdings of agency mortgage-backed securities at a pace of $30 billion per month rather than $35 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $35 billion per month rather than $40 billion per month. In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions since the inception of the current asset purchase program, the FOMC decided to make a further measured reduction in the pace of its asset purchases. Beginning in April, the FOMC will add to its holdings of agency mortgage-backed securities at a pace of $25 billion per month rather than $30 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $30 billion per month rather than $35 billion per month. Reduces the purchase rate by $5 billion each on Treasuries and MBS.  No big deal.
The FOMC 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. The FOMC 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. No change
The FOMC’s sizable and still-increasing holdings of longer-term securities should maintain downward pressure on longer-term interest rates, 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 FOMC’s dual mandate. The FOMC’s sizable and still-increasing holdings of longer-term securities should maintain downward pressure on longer-term interest rates, 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 FOMC’s dual mandate. No change.  But it has little impact on interest rates on the long end, which are rallying into a weakening global economy.
The FOMC will closely monitor incoming information on economic and financial developments 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 has improved substantially in a context of price stability. The FOMCwill closely monitor incoming information on economic and financial developments 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 has improved substantially in a context of price stability. No change. Useless paragraph.
If incoming information broadly supports the FOMC’s expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the FOMC will likely reduce the pace of

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