Yesterday afternoon in a very abbreviated report – reading time 1 minute – the U.S. Federal Reserve Policy Committee did little but affirm its plans to keep U.S. interest rates low, and to continue buying $75 billion in Treasury bonds each month through June to support the U.S. economy.  Fed officials said:

·        the U.S. economic recovery is on firmer footing, and the labor market is gradually improving;

·        household spending and business equipment investment continue to expand;

·        “investment in non-residential structures is still weak”;

·        “the housing sector continues to be depressed”;

·        they expected the recent rise in oil and other commodity prices in recent months and weeks to be temporary (reported as ‘transitory’), and said close attention will be paid to inflation and inflation expectations, which currently is “somewhat low” in circumstances of an “elevated” unemployment rate; and,

·        “the Committee continues to anticipate a gradual return to higher levels of resource utilization in a context of price stability”.

You can agree or disagree with the first five bullet points – although points three and four seem clearly correct.  I have read the sixth bullet point multiple times, and think it is ‘economist-speak’ for “we expect price stability for resources going forward, and expect the U.S. economy to grow into using more resources than it now does”.  Please add a comment to this commentary if you disagree with my interpretation.

Interestingly, the Fed report is completely silent on the:

·        goings-on in North Africa and the Middle East.  One can only assume the Fed believes the events of the past few weeks in those geographies are simply going to be mute, or otherwise simply don’t matter, in the context of the U.S. economy as it goes forward.  I for one don’t think we likely have seen the end of those events, nor do I think they can be summarily dismissed in a macro-economic context – let alone a U.S. one; and,