FOMC Leaves Rates Unchanged on Different Language in Statement

As expected, the FOMC left rates unchanged today at 5 1/4%.

At the last meeting, the DJIA closed at 12,621.69 on the January 31, 2007 date and right before today’s announcement the DJIA was 12,289.70.  This language is actually a bit different than before and there is something for bulls and bears alike.  5 minutes after the announcement, the DJIA is at 12,309.81.

Today’s Statement:

Recent indicators have been mixed and the adjustment in the housing sector is ongoing. Nevertheless, the economy seems likely to continue to expand at a moderate pace over coming quarters.

Recent readings on core inflation have been somewhat elevated. Although inflation pressures seem likely to moderate over time, the high level of resource utilization has the potential to sustain those pressures.

In these circumstances, the Committee’s predominant policy concern remains the risk that inflation will fail to moderate as expected. Future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.

Here is the PRIOR statement from the January 31 release:

Recent indicators have suggested somewhat firmer economic growth, and some tentative signs of stabilization have appeared in the housing market. Overall, the economy seems likely to expand at a moderate pace over coming quarters.

Readings on core inflation have improved modestly in recent months, and inflation pressures seem likely to moderate over time. However, the high level of resource utilization has the potential to sustain inflation pressures.

The Committee judges that some inflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.

Jon C. Ogg
March 21, 2007