FOMC 12-Dec-2006

Release Date: December 12, 2006
For immediate release

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent.

Economic growth has slowed over the course of the year, partly reflecting a substantial cooling of the housing market. Although recent indicators have been mixed, the economy seems likely to expand at a moderate pace on balance over coming quarters.

Readings on core inflation have been elevated, and the high level of resource utilization has the potential to sustain inflation pressures. However, inflation pressures seem likely to moderate over time, reflecting reduced impetus from energy prices, contained inflation expectations, and the cumulative effects of monetary policy actions and other factors restraining aggregate demand.

Nonetheless, the Committee judges that some inflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; William Poole; Kevin M. Warsh; and Janet L. Yellen. Voting against was Jeffrey M. Lacker, who preferred an increase of 25 basis points in the federal funds rate target at this meeting.

"....substantial cooling of the housing market."

I suppose if they take a national average...sure hope the "substantial cooling" does not spread out into the overall economy.

This is what the E-mini S&P500 (ES) market looked like today. The range today in the ES was "only" 10 points. I quote "only" because we usually see a wider range on Fed Days. It appears that on Fed Days without a rate change we are now seeing lower ranges. I am guessing that when they finally do move the rate we are going to see a much wider range than we have seen on the last few Fed Days.

quote:

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Originally posted by pt_emini

...sure hope the "substantial cooling" does not spread out into the overall economy.

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That wouldn't be good for the economy but as traders we need to adjust our trading patterns for that possibility.

I have a feeling the market had a insider info to trade this way usually is flat till the announcement but not today.

something about the economy I heard today and is been repeated by number of Bloomberg guests is the fact that the industry is running out of qualify workers, well this sounds like 1998/99 all over again. I for one dont know what to make of it.

I missed that report. Any industry in particular? Or were they talking about all industries in general?

I don't remember who was on but mostly engineering personnel and the fact they had to send their own people to get retrained, sorry I cant be more specific.