Inflation and Dollar decline is feared...by our now supine FED...
The FED is TOTALLY out of the picture on rates for the rest of this year... Only a major hedge fund or bank collapse; or a SHARP plunge in the dollar to about 140 on the Euro will move the FED TO ANY ACTION IN 2007...
NOTE: THE FED USED THE "SHORT FORM" AS PREDICTED HERE. See posting below :
The Statement:
Recent indicators have been mixed and the adjustment in the housing sector is ongoing. Nevertheless, the economy seems likely to continue to expand at a moderate pace over coming quarters.
Recent readings on core inflation have been somewhat elevated. Although inflation pressures seem likely to moderate over time, the high level of resource utilization has the potential to sustain those pressures.
In these circumstances, the Committee's predominant policy concern remains the risk that inflation will fail to moderate as expected. Future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.
