The post-Lehman Fed unanimity has finally been broken. The Fed again voted to keep interest rates unchanged in the 0 to 0.25 per cent range for an ‘extended period.” But now, dissent!
Thomas M. Hoenig, the Kansas City Fed president, used his new voting powers to vote against today’s action, saying, according to the minutes, that “economic and financial conditions had changed sufficiently that the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted.”
Then, too, another change, or rather, omission. In the last FOMC statement, the Fed saw “some signs of improvement” in the housing market over recent months. And then, of course, over the past month data showed housing prices stall and home sales plunge. (The Fed? Overly optimistic about the state of the housing market? Gasp!) In any case, the language was left out of this month’s statement.
All else unchanged. Liquidity facilities closing at the beginning of February, asset backed securities purchases expected to end on schedule. The economy continues to strengthen, labour market deterioration continues its abatement.
