would warrant the definition “exceptionally low”. To us,
this means rates could be raised and still qualify for the “exceptionally low” moniker
.The FOMC also released its forecast for unemployment, projected a 7.8%-8.0% UR by theend of the year, an improvement over January’s forecast of 8.2%-8.5%. This should beeasily attainable since the White House is massaging these numbers as they see fit anyway.I wish these kids would stop pounding the back of my seat. Where are the parents? Ohyeah, right next to them.
I’m beginning to think Bernanke is up to some trickeration regarding additional QE. TheFed has become more transparent than ever and yet I wonder if he’s intentionallymisdirecting us by suggesting there is really no pressing need for additional QE. Then,without much warning, we get blindsided in June with QE3 and WHAM! the market turnswildly optimistic again. The Fed gets some love and regains some of the ambiguity it lovesso much while the President gets his accommodative policy heading into the summer before elections.Goldman Chief Economist/Secret Liason with the US Government Hatzius actually thinksthe likelihood of further easing has gone down despite softening data. "Despite the weaker numbers,
we have on net become more, not less, worried about the risks to ourforecast of another round of monetary easing at the June 19-20 FOMC meeting
. It isstill our forecast, but it depends on our expectation of a meaningful amount of weakness inthe economic indicators over the next 6-8 weeks. In other words, our sense of the Fed’sreaction function to economic growth has become more hawkish than it looked after theJanuary 25 FOMC press conference, when Chairman Bernanke saw a ‘very strong case’ for additional accommodation under the FOMC’s forecasts. This shift is a headwind from the perspective of the risk asset markets....So the case for a successor program to OperationTwist still looks solid to us,
and the FOMC’s apparent reluctance to deliver it is aconcern
” (emphasis is mine).