The Fed announced today that the US economic situation is far from satisfactory, but that there is nothing much that it can (or will) do about it. Real GDP growth is, by its own admission, lower than the FOMC expected in April, and unemployment has been higher than anticipated. However, its concerns about inflation have risen and, significantly, it has dropped the previous assertion that “measures of underlying inflation are still subdued”. Chairman Bernanke believes that part of the recent slowdown is temporary, but admits that he is not fully confident that he understands the underlying causes. The FOMC is becalmed, and perhaps slightly bemused. Read more
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