The Banking and Strategy Initiative

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Here Comes the Fed Decision – FOMC Statement – July-August 2012

The statement reiterates it noted the deceleration in the First Half of the year and to be fair to them have not added any new spin to what has already become painfully obvious to most observers except for not giving in to the market penchant for more QE3/Twist as most realise it is overdrawn on such measures.

Business fixed investment has continued to advance. Household spending has been rising at a somewhat slower pace than earlier in the year. Despite some further signs of improvement, the housing sector remains depressed. Inflation has declined since earlier this year, mainly reflecting lower prices of crude oil and gasoline, and longer-term inflation expectations have remained stable.

Employment and Global Crisis’ impact are also as noted duly in Senate statements and in the June meeting

The Committee expects economic growth to remain moderate over coming quarters and then to pick up very gradually. Consequently, the Committee anticipates that the unemployment rate will decline only slowly toward levels that it judges to be consistent with its dual mandate. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook.

However even as inflationa nd rates target remain unchanged and the Spetember meeting of the FOMC may be key, the market would likely wait on Supermario tomorrow before moving on and the ECBs impact ont he markets is likely to be larger.

 

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