FOMC Statement – February 1, 2017

The Federal Open Market Committee (FOMC) released its latest monetary policy statement.  As expected, the FOMC kept its target federal funds rate the same, which is a range of 1/2 to 3/4 percent.

The next meeting on March 14/ 15 will be more important, as this is when a possible rate hike is expected.  That meeting will be associated with a press conference following.

This most recent statement said, “Inflation increased in recent quarters but is still below the Committee’s 2 percent longer-run objective.  Market-based measures of inflation compensation remain low; most survey-based measures of longer-term inflation expectations are little changed, on balance.”

The bottom line is that the Fed wants more consumer price inflation.  Yellen and company want the money that you hold to depreciate at a faster rate than what it has been doing.

The CPI numbers for December showed that year-over-year inflation went above 2% (2.1% to be exact), while the median CPI year-over-year is at 2.6%.

The Fed has gotten us into a major mess, particularly from its massive monetary inflation of 2008 to 2014.  I am not sure if Fed officials have any idea on how to get us out of this.

The next FOMC meeting will be more interesting.  I will watch it closely and provide more analysis on this subject when the time comes.