Barneke responds to the latest results on second quarter GDP growth of 1.6% as opposed to the 2.4% that the Fed had been forecasting. Clearly Barneke has mastered the art of Fed Speak. The following are some examples along with my interpretations:
Barneke describes the 1.6% result for the second quarter as being "somewhat less vigorous" than expected. In English that means it was a friggin disaster. 1.6% is only 33% below the Feds forecast. A little more than "somewhat less vigorous" I'd say.
Trying to calm market jitters, he goes on to say "The issue at this stage is not whether we have the tools to help support economic activity and guard against disinflation....We do....The issue is instead whether, at any given juncture, the benefits of each tool, in terms of additional stimulus, outweigh the the associated costs or risks of using the tool." Wow! That is quite a mouth full. I take this to mean that he believes that the Fed is damned if it does and damned if it doesn't and he has no idea what to do next.
Barneke went on to say that Fed policymakers "will certainly use its tools as needed to maintain price stability....and to promote the continuation of the economic recovery." Assuming that he is still talking about the U.S. economy, I think this is Fed Speak for "Evey man for himself, things are about to get real ugly."
As for the notion that some economist believe the Fed should temporarily increase its target for inflation, Barneke responded "I see no support for this option on the Federal Open Market Committee." This obviously means that the Fed is never going to admit that it may have been wrong.
There are many more examples of Fed Speak, in the article cited above, that you can read an interpret for yourself.
I shouldn't be so hard on the Fed chairman, he is after all only trying to keep Wall Street and the rest of the world's market from panicking and to that extent it appears that he has succeeded for the time being.
Enough said for today.
Sense or nonsense?
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