Nothing new to say

The US Federal Reserve today boosted the fed funds target range by 25 basis points, bringing it to a 22-year high of 5.25-5.50 percent.  There were no dissenters from the FOMC's decision. The accompanying press release is remarkable for its lack of any new thoughts on the evolving economic situation: it's almost as if the FOMC is bored with the whole thing and wishes everyone would just go away for the summer.

Purely for the record, these are the key points, not one of which is in any significant way different from what we have heard in the last few months. A few key quotes: 

• "economic activity has been expanding at a moderate pace. Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated".
• "In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments".
• "The Committee is strongly committed to returning inflation to its 2 percent objective".
• "The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals".

Although it is not new, perhaps it is the last of those quotes that deserves the most focus. The fact that such wording is still there after so many months implies that the Fed has still not seen convincing evidence that its tightening has gone far enough. It is impossible to guess exactly what would convince the FOMC to change course, but a couple of weak jobs reports and firmer signs of slowing core inflation would no doubt move things in that direction.  As things stand, it is impossible to rule out another 25 basis point hike at the September 19-20 FOMC meeting, but there is a lot of data on the docket before we get to that date.