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FED Statement and the $
Nearly every economist expects the Fed to remain on hold at this meeting. What they and everyone else will be focusing on is the statement afterwards. The Fed retained their inflation bias at the last meeting, but alluded to increased risks to their growth projections. [U]January statemtment:[/U] [I]"Recent indicators have suggested somewhat [U]firmer[/U] economic growth, and some tentative signs of stabilization have appeared in the housing market".[/I] [U]March Statement:[/U] [I]"Recent indicators have been [U]mixed[/U] and the adjustment in the housing sector is ongoing".[/I] However, their statement on future economic growth retained the same language. [U]January Statement:[/U] [I]"Overall, the economy seems likely to expand at a moderate pace over coming quarters".[/I] [U]March Statement:[/U] [I]..."the economy seems likely to continue to expand at a moderate pace over coming quarters".[/I] Despite the last core PCE meeting, the Fed is very likely to retain their inflation bias. With the first Q1 2007 estimate showing GDP at 1.3% and the GDP trending down, the important thing to look for is any changes that may occur in the language regarding the risks to their growth outlook (which is what happened between the January and March statements). The change in the last statement set up a bearish market for the $. What they have to say about future growth certainly will have a major influence. One of the more important contributions that this Fed has made is its transparency. We have a slowing economy and a stock market ascending to new heights. Globalization is a big factor in this, but the Fed's outlook on the direction of future growth has been a source of major support. Their words carry much weight because they know what they're doing.
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- Comment #1
- May 6, 2007 11:14am May 6, 2007 11:14am
- NewstraderFX
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- May 7, 2007 1:04am May 7, 2007 1:04am
- jcarrier
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- May 7, 2007 5:14am May 7, 2007 5:14am
- athalon7
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- May 7, 2007 8:13am May 7, 2007 8:13am
- NewstraderFX
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- Comment #5
- Edited 3:29pm May 9, 2007 2:35pm | Edited 3:29pm
- NewstraderFX
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- May 9, 2007 3:11pm May 9, 2007 3:11pm
- Fx1618
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- May 9, 2007 5:12pm May 9, 2007 5:12pm
- NewstraderFX
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