The eurozone vs. optimal currency areas
Labor mobility can, to some extent, substitute for the fiscal transfers to which he refers, but Europe doesn't have that to nearly the degree the US does, either.
- Note that a lot of phrases were moved around, but were in both April's statement and today's. Follow the link if you just want to read today's statement.
- At 2:15 Eastern Time (1:15 Central), Bernanke will be giving a press conference that can be watched live at http://www.ustream.tv/federalreserve.
Update: So far, the most interesting thing (I think) he's said is that QE2 was triggered by employment weakness combined with deflationary concerns, implying that QE3 would require a substantial threat of deflation. Update: He says US banks aren't terribly exposed, at least directly, to Greek debt. Also, large banks should be asked to hold more capital than smaller banks, partly to reduce the probability of their failure, but also to "level the playing field" by balancing the funding advantage enjoyed by firms that are expected to be bailed out.
The FOMC statement, as revised:
Information received since the Federal Open Market Committee met in
MarchApril indicates that the economic recovery is proceedingcontinuing at a moderate pace and overall conditions in the, though somewhat more slowly than the Committee had expected. Also, recent labor market are improving graduallyindicators have been weaker than anticipated. The slower pace of the recovery reflects in part factors that are likely to be temporary, including the damping effect of higher food and energy prices on consumer purchasing power and spending as well as supply chain disruptions associated with the tragic events in Japan. Household spending and business investment in equipment and software continue to expand. However, investment in nonresidential structures is still weak, and the housing sector continues to be depressed. Commodity prices have risen significantly since last summer, and concerns about global supplies of crude oil have contributed to a further increase in oil prices since the Committee met in March.Inflation has picked up in recent months, butmainly reflecting higher prices for some commodities and imported goods, as well as the recent supply chain disruptions. However, longer-term inflation expectations have remained stable and measures of underlying inflation are still subdued.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The unemployment rate remains elevated
, and measures of underlying inflation continue to be somewhat low, relative to; however, the Committee expects the pace of recovery to pick up over coming quarters and the unemployment rate to resume its gradual decline toward levels that the Committee judges to be consistent , over the longer run,with its dual mandate. Increases in the prices ofInflation has moved up recently, but the Committee anticipates that inflation will subside to levels at or below those consistent with the Committee's dual mandate as the effects of past energy and other commodities have pushed up inflation in recent monthscommodity price increases dissipate. The Committee expects these effects to be transitory, but it willHowever, the Committee will continue to pay close attention to the evolution of inflation and inflation expectations. The Committee continues to anticipate a gradual return to higher levels of resource utilization in a context of price stability.
a stronger pace ofthe ongoing economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to continue expanding its holdings of securities as announced in November. In particular, the Committee is maintaining its existing policy of reinvesting principal payments from its securities holdings and will complete purchases of $600 billion of longer-term Treasury securities by the end of the current quarter. The Committee will regularly review the size and composition of its securities holdings in light of incoming information and is prepared to adjust those holdings as needed to best foster maximum employment and price stability. The Committee will maintainkeep the target range for the federal funds rate at 0 to 1/4 percent and. The Committee continues to anticipate that economic conditions ,— including low rates of resource utilization , subdued inflation trends, and stable inflation expectations,and a subdued outlook for inflation over the medium run — are likely to warrant exceptionally low levels for the federal funds rate for an extended period. The Committee will complete its purchases of $600 billion of longer-term Treasury securities by the end of this month and will maintain its existing policy of reinvesting principal payments from its securities holdings. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.
The Committee will
continue tomonitor the economic outlook and financial developments and will employ its policy tools as necessary to support the economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandateact as needed to best foster maximum employment and price stability.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Richard W. Fisher; Narayana Kocherlakota; Charles I. Plosser; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen.Possibly moved phrases:
. The Committee will regularly review the size and composition of its securities holdings
purchases of $600 billion of longer-term Treasury securities by the end of
its existing policy of reinvesting principal payments from its securities holdings
as needed to best foster maximum employment and price stability
and is prepared to adjust those holdings