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A Terse 25



Surprisingly, not much in the FOMC statement to parse. Pretty terse. 25 basis points looks like a disappointment to stock investors.

The part of the release that most struck me? "The committee perceives that the upside and downside risks to the attainment of sustainable growth for the next few quarter are roughly equal. In contrast, the probability, though minor, of an unwelcome substantial fall in inflation exceeds that of a pickup in inflation from its already low level. On balance, the Committee believes that the latter concern is likely to predominate for the foreseeable future." (Italics mine.)

Notwithstanding the spelling mistake ("quarter" should be "quarters"), it's surprising that they see the risks as balanced, since the data, including today's durable goods data (which Greenspan is a big fan of), sure doesn't look like it's balanced, especially given that stage of the recovery cycle we are in. That's a surprise. The foreseeable future blurb? Just means that they are willing to cut and cut again and will likely use the deflation issue as the rationale to do so.

Stocks are pricing in a strong second-half 2003 recovery. 25 basis points doesn't get us closer to that becoming a reality.

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