Fed Hints At Moar As Economy 'Paused Due To Weather'

Tyler Durden's picture

In a slight surprise, the FOMC appears to have seen the recent weakness in macro data as supportive of its ongoing pumpathon even suggesting more is possible:

  • *FED SAYS GLOBAL MARKET STRAINS EASED 
  • *FED SAYS ECONOMY PAUSED DUE TO WEATHER, TRANSITORY ISSUES
  • *FED SAYS ECONOMIC ACTIVITY `PAUSED IN RECENT MONTHS'
  • *GEORGE DISSENTS FROM FOMC DECISION

So let's get this straight: the Fed did not blame the weather in December after Sandy, but blames it in January - weather that can be simply described as a perfectly mild and warmer than average winter?

Pre-FOMC: ES 1502.5, 10Y 2.025%, Crude $97.75, Gold $1678, EUR 1.3570

 

Statement:

For immediate release

Information received since the Federal Open Market Committee met in December suggests that growth in economic activity paused in recent months, in large part because of weather-related disruptions and other transitory factors. Employment has continued to expand at a moderate pace but the unemployment rate remains elevated. Household spending and business fixed investment advanced, and the housing sector has shown further improvement. Inflation has been running somewhat below the Committee’s longer-run objective, apart from temporary variations that largely reflect fluctuations in energy prices. Longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic growth will proceed at a moderate pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. Although strains in global financial markets have eased somewhat, the Committee continues to see downside risks to the economic outlook. The Committee also anticipates that inflation over the medium term likely will run at or below its 2 percent objective.

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee will continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. The Committee 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. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.

The Committee will closely monitor incoming information on economic and financial developments in coming months. If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until such improvement is achieved in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases.

To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Charles L. Evans; Jerome H. Powell; Sarah Bloom Raskin; Eric S. Rosengren; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen. Voting against the action was Esther L. George, who was concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.

* * *

Full Redline comparison to December FOMC:

 

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youngman's picture

" and employ its other policy tools as appropriate"...this is what is called a catch all phrase...meaning they can pretty much do anything they want....must be nice to be a FED...

Rob Jones's picture

The Fed is putting the pedal to the metal. The precious metal that is.

bdc63's picture

Transitory issues ... at least they are, until they aren't ...

khakuda's picture

I'm imagining Esther George sitting at a table surrounded by mindless money printing zombies saying, "Seriously, are you guys kidding?  You ALL think this is a fantastic idea?  Hello?  Ben?  Anyone???  Evans is biting my leg, can someone make him stop...Security!!"

Everybodys All American's picture

There is not one thing the Fed can do to change the course of the economy at this point and they know it. Can you imagine the reality of printing 85 bil a month and it's still creating a negative gdp? Bernanke goes down in history as the biggest dope to ever run the Fed. Bar none.

Never One Roach's picture

"Paused to Wither" don't ya mean?

 

Wait until these higher postal rates squash sales especially the international buyer who now gets sorely damaged when they buy sumthin as lite as 8 ounces (that's $12.75 to the UK, for sample).

Then you have the friendly "Credit Card Swipe Fees" up to 4%....

Internet Sale staxes...

Food rising at 8-10%...

'High Yield Savings' account yield at 0.01%...

A fat 1.6% COLA increase for seniors on SS....

...and so on.

Not gonna be a perty 2013.

 

Dewey Cheatum Howe's picture

Bitcoin mining and vending as a middle man to exchange currency for online transactions looks to be the short term work around.

joego1's picture

Another reason for a currency war.

Nothing To See Here's picture

Government elementary textbook :

When the economy goes bad, blame the 'market' (and now the weather).

When the economy goes good, it's thanks to us.

ZeroAvatar's picture

YA-Hoo:  Same thing............

 

http://finance.yahoo.com/blogs/breakout/3-reasons-negative-gdp-not-bad-t...

 

P.S.  Don't actually EXPECT anyone to click on link, for instructional purposes only.

pragmatic hobo's picture

so, according to bernanke cold weather is not allowed any more?

SokPOTUS's picture

Gentlemen:

Start your SUV's!

 

Gimp's picture

Pucker-up everyone...the weather made me do  it, or not.

Clowns on Acid's picture

Hilarious....Market surges in Jan after the storm but slowdown is due to weather....can make this shiite up !

Had to know this was coming...
White House: GOP responsible for contracting economy
By Justin Sink - 01/30/13 01:11 PM ET

White House press secretary Jay Carney laid the blame for a surprise economic contraction squarely at the feet of congressional Republicans Wednesday, saying economic threats during the "fiscal cliff" negotiations had prevented important defense spending.

"Our economy is facing a major headwinds, and that's Republicans in Congress," Carney said.

SokPOTUS's picture

Democrats arguing that defense spending is too low.

Let me off this crazy thing...I think I'm gonna hurl!

 

dunce's picture

Item number 1476 on the list of things blamed on climate change, not to worry though, higher taxes will fix everything.

SokPOTUS's picture

What a bunch of MOAR-ons.

Meat Hammer's picture

WTF!  I thought natural disasters fit right into the Keynesian wet dream of breaking shit to help the economy!  Somebody lied to me

Son of Loki's picture

Ben calls it the "weather"...in Beijing it's called "pollution."

GNWT's picture

party like it's 1999...

 

with the Silver Liberation Army...

at...

 

www.ZIRPinUSA.com

icanhasbailout's picture

economic activity paused due to people being drunk from Thanksgiving straight through to the second week of January

R_J's picture

oops, im not even done with the first half, BUT:

S E R I O US L Y , this report is one of the funniest i have read for quite sometime...
-I knew that the closer we got to another F0MCabal meeting, more obvious and funny their lies would be.

HanX! to ZeroHedge for posting "their" hillarious "Shite"

R_J