COMMENT ON THE DECEMBER 16, 2009 FOMC STATEMENT
I continue to believe that a focus on when the FOMC will raise the Fed Funds Rate is incorrect. Rather, the focus should be on when the removal of quantitative easing will begin. When will the FOMC reduce the size of its balance sheet, actually selling some of its direct purchases over the past year?
If there is a FOMC meeting for the market to fear, I suggest March 16, 2010. At that meeting, the committee will have three consecutive unemployment reports to measure any continued improvement from the December 4th Unemployment report. The next FOMC meeting, scheduled for January 27, 2010, does not provide enough time to successfully measure any labor improvement.
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