Banking on BernankeEconomy | September 27, 2010 at 1:35 am
The Federal Open Market Committee released a statement recently based on information they had received since the Committee last convened in August. Among broader things, the statement talked about
- The pace of recovery, and how it has slowed down of late.
- Household spending increasing, but being hamstrung by high unemployment levels and unavailability of credit.
- Inflation not being consistent with its price stability and employment mandates.
- How there will likely be no shift in policy from the September gathering.
It’s annoying in a sense, since the Fed does acknowledge that there is an issue, but this policy is tantamount to just sweeping the issue under the carpet. The Federal Reserve has its stated aims and ambitions for the economy and even as these aims might well not be the met, the Fed has decided to not do anything about it yet. This is made all the more ironic by the fact that the Fed has stated it will do all it can to bring inflation back to levels that are more consistent with levels it sees fit. So why then is the Fed opting to sit back and not do anything right now?
September shows the economy to be in slightly better shape than in August, but it’s still not that good. And, which is worse, inflation is expected to fall further still this month. The next scheduled meeting for the Federal Open Market Committee is in November and it seems as if we will have to wait that long for something of serious consequence to happen and for the Federal Reserve to take another stab at fixing an ailing economy. On the face of it, it does look as if the Fed will be moving towards easing the market at some point, but why delay something that is desperately needed by our nation?
At this point in time, it does seem rather pointless to debate and conjecture about what exactly is going through the minds of the Federal Open Market Committee and all we can do as the watching public is sit back and wonder why the Fed hasn’t yet taken action. But developments on that front are yet to come, and the bottom line of it all is that the Federal Reserve has to do more in order to prop up our economy and boost inflation, and even the Fed seems to acknowledge this one simple fact. It’s just a waiting game that will have to be played, unfortunately.