FOMC Minutes
The hits and misses in the FOMC Minutes...
Absolutely Correct: "Possible increases in resource utilization, in combination with the elevated prices of energy and other commodities, had the potential to add to inflation pressures. In these circumstances, the Committee judged that some further policy firming may be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance"
Economic slack is tight and energy pass through at $70 is just starting to be felt.
Absolutely Incorrect: "even if nominal wages should accelerate somewhat, relatively wide profit margins could buffer the effect on prices of final goods and services. While firms would seek to maintain those margins, recent experience suggested that this might be accomplished in part through further productivity gains, which had remained fairly strong on balance in recent quarters, rather than through more rapid price hikes."
Margins are shrinking and productivity has hit a wall. In order to maintain margins, prices will continue to rise.
"Given the risks to growth and inflation, Committee members were uncertain about how much, if any, further tightening would be needed after today's action...the extent and timing of any such firming will depend importantly on the evolution of the economic outlook as implied by incoming information."
Translation: We are uncertain if further raises are needed. We will raise or not raise based on the incoming data.
Absolutely Correct: "Possible increases in resource utilization, in combination with the elevated prices of energy and other commodities, had the potential to add to inflation pressures. In these circumstances, the Committee judged that some further policy firming may be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance"
Economic slack is tight and energy pass through at $70 is just starting to be felt.
Absolutely Incorrect: "even if nominal wages should accelerate somewhat, relatively wide profit margins could buffer the effect on prices of final goods and services. While firms would seek to maintain those margins, recent experience suggested that this might be accomplished in part through further productivity gains, which had remained fairly strong on balance in recent quarters, rather than through more rapid price hikes."
Margins are shrinking and productivity has hit a wall. In order to maintain margins, prices will continue to rise.
"Given the risks to growth and inflation, Committee members were uncertain about how much, if any, further tightening would be needed after today's action...the extent and timing of any such firming will depend importantly on the evolution of the economic outlook as implied by incoming information."
Translation: We are uncertain if further raises are needed. We will raise or not raise based on the incoming data.
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