The vertical trace on the bond market EKG after the Fed's Wednesday meeting took mortgages up a quarter-percent, but rates held in the fives, and the more durable damage has been to stocks. The Fed's substitution of "patience" for "considerable period" was a smart piece of central banking. The Fed would someday inevitably have to abandon the "considerable" handcuff; it's far better to do so now, a long ways (I hope) before actually having to increase the cost of money. Now the Fed can return to useful post-meeting statements that are descriptive of the economy and monetary policy, and I expect them to deploy a thesaurus full of successive synonyms for "patience" in order to avoid a new handcuff. More important than the Wednesday's shift from "considerable" were the minutes of the Fed's December meeting, which describe a "changed assessment" to belief in an improving economy and "substantially reduced" chance for unwelcome disinflation. The key sentence in the minutes: "At some poin...
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