Tuesday, December 12, 2006

A few last thoughts on the FOMC

Upon further reading of the comments the Fed feels that,

"Economic growth has slowed over the course of the year, partly reflecting a substantial cooling of the housing market. Although recent indicators have been mixed, the economy seems likely to expand at a moderate pace on balance over coming quarters"

On Inflation,

The Fed believes that core inflation is likely to moderate but it is still elevated and that is why they have maintained thier tightening bias.

Although the vast majority of market participants are looking for slowing growth over the coming months, the Fed is clearly not in the state of mind. A look at how the market reacted, weaker dollar and a higher bond market reflects that at this time the market feels that the Fed is not correct. Only time will tell.



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