April 2011	June 2011	Comments
Information received since the Federal Open Market Committee met in March indicates that the economic recovery is proceeding at a moderate pace	Information received since the Federal Open Market Committee met in April indicates that the economic recovery is continuing at a moderate pace, though somewhat more slowly than the Committee had expected.	Shades down their view of GDP.? (finally!)
and overall conditions in the labor market are improving gradually.	Also, recent labor market indicators have been weaker than anticipated.? The slower pace of the recovery reflects in part factors that are likely to be temporary, including the damping effect of higher food and energy prices on consumer purchasing power and spending as well as supply chain disruptions associated with the tragic events in Japan.	Shades down their view of employment.? Wishful thinking regarding transitory factors? Japan does not have that big of an impact on US employment, nor do food and energy prices, which have been going up for some time.
Household spending and business investment in equipment and software continue to expand.	Household spending and business investment in equipment and software continue to expand.	No change.
However, investment in nonresidential structures is still weak, and the housing sector continues to be depressed.	However, investment in nonresidential structures is still weak, and the housing sector continues to be depressed.	No change.
Commodity prices have risen significantly since last summer, and concerns about global supplies of crude oil have contributed to a further increase in oil prices since the Committee met in March.		Sentence dropped, as have commodities dropped.
Inflation has picked up in recent months, but longer-term inflation expectations have remained stable and measures of underlying inflation are still subdued.	Inflation has picked up in recent months, mainly reflecting higher prices for some commodities and imported goods, as well as the recent supply chain disruptions.? However, longer-term inflation expectations have remained stable.	Shades inflation view up a little, but argues that it is transitory.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability.? The unemployment rate remains elevated, and measures of underlying inflation continue to be somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate.	Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability.? The unemployment rate remains elevated; however, the Committee expects the pace of recovery to pick up over coming quarters and the unemployment rate to resume its gradual decline toward levels that the Committee judges to be consistent with its dual mandate.	FOMC expresses additional optimism regarding recovery.? Every bad thing is transitory, every good thing is continuing, except housing.
	Inflation has moved up recently, but the Committee anticipates that inflation will subside to levels at or below those consistent with the Committee’s dual mandate	New sentence.? Again, inflation transitory.
Increases in the prices of energy and other commodities have pushed up inflation in recent months.? The Committee expects these effects to be transitory, but it will pay close attention to the evolution of inflation and inflation expectations.	as the effects of past energy and other commodity price increases dissipate. ?However, the Committee will continue to pay close attention to the evolution of inflation and inflation expectations.	Sees effect of rise in commodity prices fading.
The Committee continues to anticipate a gradual return to higher levels of resource utilization in a context of price stability.		Sentence dropped.
To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to continue expanding its holdings of securities as announced in November.	To promote the ongoing economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent.	Reemphasizes the Fed funds rate, brings it up higher in the document, now that QE2 is waning.
	The Committee continues to anticipate that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate for an extended period.	Moved up from below. ?exceptionally low levels for the federal funds rate for an extended period? means that the short end of the yield curve will stay flat as a pancake.
In particular, the Committee is maintaining its existing policy of reinvesting principal payments from its securities holdings and will complete purchases of $600 billion of longer-term Treasury securities by the end of the current quarter.	The Committee will complete its purchases of $600 billion of longer-term Treasury securities by the end of this month and will maintain its existing policy of reinvesting principal payments from its securities holdings.	No real change. They will stealth-fund the US Government to the tune of $600 Billion.
The Committee will regularly review the size and composition of its securities holdings in light of incoming information and is prepared to adjust those holdings as needed to best foster maximum employment and price stability.	The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.	They see the end of QE2 coming, and will manage their bloated balance sheet as best they can.
The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period.		Moved higher in the document.
The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to support the economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate.	The Committee will monitor the economic outlook and financial developments and will act as needed to best foster maximum employment and price stability.	Little real change.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Richard W. Fisher; Narayana Kocherlakota; Charles I. Plosser; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen.	Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Richard W. Fisher; Narayana Kocherlakota; Charles I. Plosser; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen.	No dissent.? Where are the so-called hawks?

Comments

• Given that the effects of QE2 are subsiding, the FOMC moves the Fed funds sentence up higher in the document and moves up the language that ?low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate for an extended period.? Means the front end of the yield curve will hug zero for some time, absent a crisis in inflation or credit.
• In one sense, the FOMC is emphasizing what they can do in the future, not what is in the past.
• The FOMC is a lot more bullish on the strength of the economy than the general public.? Aside from housing, every good thing is continuing, and every bad thing is transitory.
• The Fed engages in wishful thinking regarding transitory employment factors? Japan does not have that big of an impact on US employment, nor do food and energy prices, which have been going up for some time.
• The key variables on Fed Policy are capacity utilization, unemployment, inflation trends, and inflation expectations.? As a result, the FOMC ain?t moving rates up, absent increases in employment, or a US Dollar crisis.? Labor employment is the key metric.
• Where are the hawks?? This report does not give a fair rendering of the rising risks of inflation, driven by commodity, agriculture, and energy costs.
• The Fed is not shrinking its balance sheet anytime soon.

Questions for Dr. Bernanke:

• How big is the effect on employment from higher food and energy prices on consumer purchasing power and spending as well as supply chain disruptions associated with the tragic events in Japan?
• Couldn?t increased unemployment be structural, after all, there is a lot more competition from labor in emerging markets?
• Isn?t stagflation a possibility here?? I mean, no one expected it in the ?70s either.
• Could we end up with another debt bubble from keeping short rates so low?
• If the Fed ever does shrink its balance sheet, what effect will it have on the banks?
• Could we have more economic historians on the FOMC, and fewer neoclassical economists?? Perhaps we could end the intellectual monoculture there?? (Even I wouldn’t ask this… I know the answer.)