The minutes from the latest FOMC meeting are indicating a more optimistic group that controls the monetary policy. The higher GDP forecast for 2010 is now at 3.2% to 3.7% with core inflation forecasts lowered down to a range of 0.9% to $1.2%. The FOMC also sees unemployment at 9.1% to 9.5% in the fourth quarter. Ben Bernanke and friends have much hope, but newer developments from the April 27 to 28 date are far more pressing.
While most board members are favoring asset sales, the board is divided over when even if it wants to go back to a more normal portfolio. In short, all that agency and mortgage paper it owns WILL be sold. Just not yet.
This is all great, except for one thing. The minutes from the last meeting was based upon the end of April. That means that the woes of the PIIGS and Greece had not yet become a Eurozone-wide fire. Whether or not that matters, we’ll know in the coming weeks.
The big takeaway is that the news of today and the minutes from last month signal that the officials in charge are not going to jack rates up any faster than they have telegraphed.
JON C. OGG
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