Fed Calls Out Lawmakers on Shutdown
Posted at 2:16 p.m. on Oct. 30
The Federal Open Market Committee released the policy statement from its October meeting, which continued to delay tapering of the quantitative easing program, but included a veiled reference to delayed economic data due to the government shutdown.
Key language (emphasis added): “Information received since the Federal Open Market Committee met in September generally suggests that economic activity has continued to expand at a moderate pace… Available data suggest that household spending and business fixed investment advanced, while the recovery in the housing sector slowed somewhat in recent months.”
Neil Irwin: “The Fed thought the recovery was going okay back in the summer, so signaled a taper. That signaling drove a sell-off in markets. That sell-off drove up interest rates, and so the Fed decided not to taper in September, after all, worried about tight financial conditions — tight financial conditions that the Fed itself had brought on!”