FOMC’s Deep Thoughts on Housing and All the Rest

The Fed’s minutes are outfrom its January 27 and 28 open market committee meeting, when it voted to keep the fed funds target rate of 0 to 0.25%.

As the Associated Press notes, FOMC members concluded the sluggish nature of economic recovery in the U.S. will keep the unemployment rate “high” for the next two years:

Most participants again projected that the economy would grow somewhat more rapidly in 2011 and 2012, generating a more pro- nounced decline in the unemployment rate, as financial conditions and the availability of credit continue to improve.

As my colleague Randy Forsyth outlined back in January, the pace of housing recovery was disappointing to the FOMC, as shown by the stripping out of language about “signs of improvement.” Housing recovery “seemed to be on a lower-than-anticipated trajectory,” FOMC meeting participants concluded.

Lastly, the minutes note Fed president Thomas Hoenig’s objection to language about keeping the fed funds low for “an extended period” of time:

“Mr. Hoenig believed that it would be more appropriate for the Committee to express an ex- pectation that the federal funds rate would be low for some time, given “In recent months, economic and financial conditions improved steadily.”