The minutes from the December FOMC meeting where rates were essentially taken to zero have now been released. What is interesting is that there is very little expected hope for anything great in 2009. The FOMC has noted substantially weaker conditions persisting. This quote pretty much sums it up, although even this minimizes the total commentary:
- "…investors seemed to become more concerned about the likelihood of a deep and prolonged recession."
The economic risks are substantial to the economy despite substantialeasing to inflationary pressures. It also noted that there were somewho see inflation as too low, meaning deflationary worries arethere. The Fed staff now admits that it sees a decline in GDP for 2009and unemployment will rise significantly into 2010.
If you read through the minutes it reads like a tragedy. About the only good news is that the FOMC noted the commercial paper markets had improved. They improved because of that government guarantee. Otherwise, there would not even be that.
The weather man has just issued his own forecasts… no sunshine, nearly 100% chance of pain for the foreseeable future.
Jon C. Ogg
January 6, 2009