Other comments are that activity has continued to strengthen, although activity is likely to be moderate for a time. Of note is labor, where the FOMC said the deterioration in the labor market is abating. The FOMC still sees inflation subdued for some time and slack resources are seen keeping costs pressures down. Longer-term inflation expectations remain stable.
Today’s additional notes include the notion that financial market conditions are supportive of growth even though bank lending ‘continues to contract’ and despite the notion that household spending has remained tight. As for companies, business spending was noted as up even as companies remain reluctant to make new hires. Software spending was noted as stronger, but there is still little building seen.
The FOMC also is still maintaining that the agency securities purchases will end in the first quarter, but is still buying $1.25 trillion in agency mortgage-backed securities and $175 billion in agency-backed debt. Most of the liquidity facilities are set to expire in February and it is closing swap deals with foreign central banks by February 1.
This was the first dissenting vote in months, but this is no show that an end to the free-money is coming soon. The dollar-carry-trade continues. The full statement is here from the FOMC.
JON C. OGG
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