This is just getting better and better:
- FOMC: 2012 GROWTH AT 2.2%-2.7% VS 2.5%-2.9% IN NOV. FORECAST
- ELEVEN OF 17 FED OFFICIALS SEE MAIN RATE ABOVE 0.25% IN 2014
- SIX OF 17 FED OFFICIALS SEE NO RATE INCREASE BEFORE 2015
- FOMC DOESN'T SET SPECIFIC LONG-RUN GOAL FOR EMPLOYMENT LEVEL
Japan is now seriously blushing. As for the reality of the Fed's forecasts, they are absolutely worthless, so no point in even spending one minute on them.
Furthermore, the Fed, contrary to some misunderstanding, is not engaging in inflation targeting with endless QE until said inflation is achieved. It is merely saying what it predicts the inflation rate should be (modest difference). Of course, at 2%, we know just where inflation will never be - this is after all the Fed.
The inflation rate over the longer run is primarily determined by monetary policy, and hence the Committee has the ability to specify a longer-run goal for inflation. The Committee judges that inflation at the rate of 2 percent, as measured by the annual change in the price index for personal consumption expenditures, is most consistent over the longer run with the Federal Reserve's statutory mandate. Communicating this inflation goal clearly to the public helps keep longer-term inflation expectations firmly anchored, thereby fostering price stability and moderate long-term interest rates and enhancing the Committee's ability to promote maximum employment in the face of significant economic disturbances.
Yet here is the funniest chart: the "longer run" fed funds rate.
Uh...if you keep ZIRP until 2015, we are going to have a 100% FF rate in 2016. Because what the Fed is doing is setting the stage for the biggest, and finally last, credit bubble in the history of the world.