The minutes from the December FOMC meeting where rates were essentially taken to zero have now been released. What is interesting here is that there is very little expected hope for anything great in 2009. The FOMC has noted substantially weaker conditions persisting. This quote pretty much sums it up, although even this minimizes the total commentary:
- "...investors seemed to become more concerned about the likelihood of a deep and prolonged recession."
The economic risks are substantial to the economy despite substantial easing to inflationary pressures. It also noted that there were some who see inflation as too low, meaning the deflationary worries are there. The Fed staff now admits that it sees a decline in GDP for 2009 and unemployment will rise significantly into 2010.
If you read through the minutes it reads like a tragedy. About the only good news in there is that the FOMC noted the commercial paper markets had improved. They improved because of that government guarantee, otherwise there would not even be that.
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