Fedwatch: Add another .25%, but what does “measured firming” mean?

by Alex Stenback on December 13, 2005

Statement Accompanying Today’s Rate Hike [FederalReserve.gov] has been posted.  Commence to parsing, compare/contrast etc.

Today’s Statement:

snip…The Committee judges that some further measured policy firming is likely to be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance. In any event, the Committee will respond to changes in economic prospects as needed to foster these objectives…snip

November Statement:

snipthe Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability…snip

Notice the change in language from "policy accomodation can be removed at a pace that is likely to be to measured." to today’s "some further measured policy firming is likely to be needed…" 

Expect to see a lot of hand-wringing in the press over exactly what this new langauge means, but it seems to us that the Fed is saying they are all but done hiking rates.  From recent experience, we know what "policy accomodation can be removed" means – rate hikes.  This new language would seem to suggest something other than that (pause? One or two more hikes then pause?) going forward.

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