June 30, 2006
Bureaucratese and the FOMC Statement
I think this FOMC Statement could be better written — the last paragraph is especially bad. Anyone have suggestions for how to make it simpler and more direct? I’ve italicized the bits that grate, and will post my edited version when I get a chance.
The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 5-1/4 percent.
Recent indicators suggest that economic growth is moderating from its quite strong pace earlier this year, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices.
Readings on core inflation have been elevated in recent months. Ongoing productivity gains have held down the rise in unit labor costs, and inflation expectations remain contained. However, the high levels of resource utilization and of the prices of energy and other commodities have the potential to sustain inflation pressures.
Although the moderation in the growth of aggregate demand should help to limit inflation pressures over time, 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. In any event, the Committee will respond to changes in economic prospects as needed to support the attainment of its objectives.
The WSJ Parses the latest statement (.gif)
UPDATE: No doubt inspired by this post, the ever-clever Paul Kedrosky created an instant FOMC press release generator.
June 30th, 2006 at 9:47 am
Are you assuming that they want it to be ‘more direct’? Maybe Benny is graduating from Kindergarten.
June 30th, 2006 at 9:52 am
BBC: I think it’s possible for them to be frank and straightforward about monetary policy decisions. I know the Fed wants to intimidate or overwhelm readers to protect themselves from criticism, but I think that’s both unnecessary and foolish.
June 30th, 2006 at 9:57 am
Surprised you didn’t also italicize “inflation expectations remain contained”.
June 30th, 2006 at 10:00 am
Moon: I should have. I realize now that I might as well italicize the whole damn thing. ;-) Combining weasel words and economic jargon is deadly — the Fed is expert at it.
June 30th, 2006 at 10:33 am
What exactly is resource utilization? Does it refer to natural resources, or something more general?
Below is my best shot at a re-write. I ripped out all the fluff near the end about their future intentions. Seems like that belongs in a separate statement.
———————-
Interest rates up (-).
Energy prices up (+).
Commodity prices up (+).
Resource utilization up (+).
Productivity up (-).
Housing market slowing (-).
Economy growing more slowly (+).
Based on the above, core inflation may still grow faster than we would like. We raised the federal funds rate by 1/4 percent to 5-1/4 percent.
June 30th, 2006 at 1:05 pm
Moon: “Resource utilization” is vague econo-jargon. It’s exactly the kind of thing they shouldn’t write.
July 1st, 2006 at 10:14 pm
The WSJ’s parsing of the 4th paragraph places weight on the consistency or inconsistency in wording. We all know that what something says is not always aligned with what something means; therefore, even though wording does not change underlying meaning may.
July 1st, 2006 at 11:08 pm
Moon: I’m not interested in the consistency of the wording — I’m only interested in the fact that it’s consistently badly written. Whoever wrote “as implied by incoming information” should have their head shrunk by savages.
July 2nd, 2006 at 6:55 pm
Moon: Randall Forsyth writes: “resource utilization is Fedspeak for low unemployment.”
July 17th, 2006 at 2:06 pm
[…] Thomas Donlan wrote that Carol Loomis is Warren Buffett’s “amanuensis” (one who is employed to take dictation or to copy manuscript); I thought that was a little mean. Jim McTague, perhaps inspired by this post, “parses the new Fedspeak” with the help of a grammarian and a poet. The grammarian called Fedspeak “gratuitously and probably intentionally complex.” […]