December 15, 2011
Fed Ends 2011 With a Whimper
by Liz Ann Sonders
The Federal Open Market Committee (FOMC) held its final meeting of 2011 and went out with a bit of a whimper. There were very few changes in its statement relative to November’s, although it did mildly upgrade its assessment of the economy: “The economy has been expanding moderately, notwithstanding some apparent slowing in global growth.” The Fed also gave a nod to recent improvement in jobs: “While indicators point to some improvement in overall labor market conditions, the unemployment rate remains elevated.”
However, the Fed did downgrade its assessment of the investment climate: “Household spending has continued to advance, but business fixed investment appears to be increasing less rapidly and the housing sector remains depressed.” This last comment about housing was a touch perplexing given what it didn’t contain: any nod to the fact that in the past month there have been strong readings for mortgage applications, easier mortgage lending conditions and a surge in homebuilder sentiment.
Key Points
* There were no surprises out of the Fed meeting today, with short-term interest rates remaining pegged at zero.
* There was one dissenting FOMC member who wished for additional policy accommodation.
* Much of the Fed’s near-term focus remains on the eurozone debt crisis.
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