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Wednesday, May 01, 2013

Fed Open Market Committee Vows To Step On The Accelerator

Today, the Federal Open Market Committee (the "Fed") pointedly criticized Congressional mismanagement of the economy and vowed to step on the monetary accelerator to counteract the downward spiral in the economy caused by those bad decisions by our elected representatives.

The Fed made a point to criticize Congress in that, “Labor market conditions have shown some improvement in recent months, on balance, but the unemployment rate remains elevated. Household spending and business fixed investment advanced, and the housing sector has strengthened further, but fiscal policy is restraining economic growth.

Further, they promised to step harder on the monetary accelerator:

The Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools 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.

Clearly, this is unprecedented criticism of the government from the national central bank. It seems that the Fed wants to put the blame on the Congress for the lack of recovery in the economy.