The January statement released minutes ago is practically identical to the prior month and contains the highly anticipated continuation of measured reduction in the monthly pace of bond purchases. The FOMC voted unanimously, and we don’t recall off hand the last time that happened, to reduce purchases by $10 billion to $65 billion per month and promises to maintain the same pace of reduction assuming progress is being made to its dual labor-inflation mandate. In December Eric Rosengren voted against, claiming that the rate of unemployment was too high and that to taper at the time would prove counter-productive.
The latest statement failed to make any reference to more recent emerging market instability nor the counter-inflation measures currently put in place in India, Turkey and South Africa. At the same time the Fed recognized that “inflation persistently below its 2 percent objective could pose risks to economic performance”. The Fed failed to change its view on the improving health of the US economy while recognizing that “labor market indicators were mixed but on balance showed further improvement”.