Parsing the Fed is everyone's favorite game, so before the Fed wraps its sixth meeting of 2013 this afternoon, it's time to play "Build Your Own Fed Statement!" It's easy to win, just choose your favorite answers from the bold options in the Ted Statement below.
Information received since the Federal Open Market Committee met in July suggests that economic activity expanded at a (modest; morose; mediocre) pace during the first half of the year. Labor market conditions have shown further improvement in recent months, on balance, but the (unemployment rate; omnipresent NSA surveillance; probability of an imminent debt ceiling crisis) remains elevated. Household spending and business fixed investment advanced, and the housing sector has been strengthening, but mortgage rates have (risen somewhat; depressed both borrowers and loan officers; scuttled Committee members' refinancing plans) and (fiscal policy; workplace fantasy football draft distraction; taper tantrum uncertainty) is restraining economic growth. Partly reflecting transitory influences, inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability (as mentioned each statement; to overcome continual Congressional dysfunction; while nurturing its legacies and lucrative lecture circuit incomes). The Committee expects that, with (appropriate policy accommodation; a robust expansion of twerking dance studios; frequent Johnny Manziel autograph sessions), economic growth will pick up from its recent pace and the (unemployment rate; cancellation rate for home purchase contracts; depression rate among refinance oriented loan officers) will gradually decline toward levels the Committee judges consistent with its dual mandate. The Committee sees the downside risks to the outlook for the economy and the labor market as having (diminished since the fall; stagnated as part time jobs become the norm; risen dramatically for current Patriots' wide receivers). The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic stability, but it anticipates that inflation will move back toward its objective over the medium term.
To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee decided to continue purchasing (additional agency mortgage-backed securities; advance Twitter stock options; Alabama SEC and national championship parlays) at a pace of $40 billion per month and longer-term Treasury securities at a (still accommodative; cursory; token) pace of ($35; $20; $3.14) billion per month (as austerity measures have reduced bond supply; solely to see if it triggers a Rick Santelli rant; to preserve Chairman Bernanke's reputation) . The Committee is maintaining its (existing; unprecedented; seemingly limitless) policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.
The Committee will closely monitor (incoming information on economic and financial developments; our multiple fantasy football teams; future Chairman candidates' Las Vegas odds) in coming months. The Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools (including both car washes and garage sales; such as hiring unemployed relatives as interns; of accepting multiple part-time jobs to boost BLS employment outlook) as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes. In determining the size, pace, and composition of its asset purchases, the Committee will continue to take appropriate account of the likely efficacy and costs of such purchases as well as the extent of progress toward (its economic objectives; a consistent and coherent US/Syrian foreign policy; a Fed Chairman candidate acceptable to Senate Banking Committee members).
To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of (monetary policy; interest-free personal Treasury loans to Committee members; regular happy hour attendance to boost restaurant employment) will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for (the federal funds rate; dismal Congressional approval ratings; Mark Sanchez' Pro Bowl prospects) will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee's 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent (as previously referenced in the second paragraph; as opposed to intentionally shocking markets; solely to confuse bewildered bond analysts).