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early and often

The Federal Reserve Is Not Ready to Make a Commitment

Not ready.

Parsing the meaning of the Federal Reserve's monthly statements these days is not unlike being in a relationship with someone you really like but who is skittish about making a real commitment. You're nervous, they're cautious because they don't want to get your hopes up, and all you can do is read too much into what little they do say about their feelings. Similarly, if Fed Chairman Ben Bernanke says "deterioration in the labor market is abating," it's like your intended saying that they've stopped looking for other people to sleep with. If he says the labor market is "stabilizing," it's like looking at furniture together — a sign that they might be ready to take the next step. And if he says he is raising interest rates, it is like your beloved has said, "I have always wanted children": a sure sign that you are entirely out of the woods and are moving in a positive direction. That is not what happened today.

In its policy statement, the Fed retained year-old language which states that short-term interest rates will remain "exceptionally low" for an "extended period," which means at least several more months.


At least. Banish all thoughts of full recovery by June. But look into booking the Plaza in fall!

Parsing the Fed: How the Statement Changed [Real Time Economics/WSJ]

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Photo: Getty Images