FOMC
"Information received since the Federal Open Market Committee met in September suggests that economic activity has continued to pick up".
If they firmly believe their own words then why would they not start to remove the excessive accommodation in the system? Heck, even the unemployment rate improved last month to 10%. Yes, I know, one months worth of data does not make a trend...
As I've stated before if you were to build a model that conducted monetary policy it should be centered on Capacity Utilization rates (which are produced by the Fed). Yesterday we saw this tick up to 71.3% which is a nice rebound from the 68.1% low that occurred in June. For comparison sake this is still below the low that was saw during the 2002 recession of 73.6.%
If I was on the committee today I'd vote for a 10bp hike. In reality 10bps makes no difference, all it does is send a signal. It may even get the banks to lend again.
Let's not worry about yesterday's bubble too much longer, let's worry about tomorrow's bubble that is developing if the FOMC stays accommodative for too long.
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