The economist article is an analysis of the FOMC's recent press release after their meeting on the 27th of January.
With the fall in oil prices, the entire world's economy, including that of the US has been affected and the radical decrease in oil prices and its consequent impact on the US economy is perhaps something the Fed did not entirely foresee.
At the moment, despite the Fed noting some improvement in labor market conditions, the long-term problem of low inflation continues to stand. The Fed seems rightly concerned about the possible stagnation of economic growth and activity.
The more concerning part however is that the FOMC does not meet until March and the next few weeks seem specifically critical in terms of monetary policy adjustments so that the US economy can have a buffer against potential losses.
The Fed appears to stick to its stance on the target FFR and hopefully, in an emergency situation will adjust monetary policy to suit the short-term and long-term needs of the people.
http://www.economist.com/blogs/freeexchange/2016/01/no-take-backs
http://www.federalreserve.gov/newsevents/press/monetary/20160127a.htm
Personally, I am puzzled to see that the drop in oil prices has effected the US economy, as well as economies across the world, so crucially. Furthermore, it also scares me that the FOMC doesn't meet for another month. In between this time I hope that the oil prices start to rise and economies all throughout the world will begin to bounce back!
ReplyDeleteIt is very interesting how so many countries are hurting from the drop in oil prices and how the US economy has reacted to the low oil prices. The oil prices will rise again and countries will benefit from it but I really hope the FED will act quickly if need be and adjust the monetary policy so people aren't hurt in the long run from these low prices.
ReplyDeleteI find it ironic that we complain when oil prices are too high and also when they are too low. There is certainly a sweet spot for oil price, but it isn't there. How would the FED adjust monetary policy to help people from hurting in the long run?
ReplyDeleteIt will be interesting to see how the market and investors fare this month of February without any FOMC meetings. In a Bloomberg article, the author is less optimistic then some on this lapse in meetings and fears that the investors are left "to navigate any new threat to the global economy on their own after central bankers helped to limit losses in the worst January for stocks since 2009." Even though they are not supposed to meet, if anything drastic were to occur and hurt the market further, then the FOMC would step in. Additionally, although the huge drop in prices was not predicted, the Fed must feel generally positive about the state of the economy since they raised historically low interest rates in December to between .25% and .5%.
ReplyDelete(article mentioned: http://www.bloomberg.com/news/articles/2016-01-31/february-rougthe-longest-month-for-investors-awaiting-central-banks)
It will be interesting to see how the market and investors fare this month of February without any FOMC meetings. In a Bloomberg article, the author is less optimistic then some on this lapse in meetings and fears that the investors are left "to navigate any new threat to the global economy on their own after central bankers helped to limit losses in the worst January for stocks since 2009." Even though they are not supposed to meet, if anything drastic were to occur and hurt the market further, then the FOMC would step in. Additionally, although the huge drop in prices was not predicted, the Fed must feel generally positive about the state of the economy since they raised historically low interest rates in December to between .25% and .5%.
ReplyDelete(article mentioned: http://www.bloomberg.com/news/articles/2016-01-31/february-rougthe-longest-month-for-investors-awaiting-central-banks)