CNBC commentator Ron Insana
isn't too happy with the Federal Reserve's decision to change the wording of its policy statement Wednesday from its last one in October.
The new statement
said that the Fed's policymaking Federal Open Market Committee "judges that it can be patient in beginning to normalize the stance of monetary policy."
Further, the statement stated, "the Committee sees this guidance as consistent with its previous statement that it likely will be appropriate to maintain the zero to 0.25 percent target range for the federal funds rate for a considerable time following the end of its asset purchase program in
"There was no reason for the Federal Reserve to alter the language in its official policy statement," Insana wrote in a commentary for CNBC.
"While patience is a virtue, . . . the Fed's view of inflation is being largely driven by a transitory drop in energy prices. The world is still at risk of deflation and weak economic growth."
So the Fed should maintain its earlier caution, Insana wrote. "Having said that, if the Fed is suggesting that 'patience' means pushing off a rate hike until late next year, then the markets are getting it right," he said.
"What bothers me most is the notion that the drop in domestic inflation is transitory," Insana added.
"With the rest of the world deflating, the Fed needs to be more than patient before altering its language AND its policies."
The personal consumption expenditures price index rose 1.4 percent in the 12 months through October, well below the Fed's 2 percent target.
To be sure, the new language doesn't commit the Fed to any timetable for lifting rates. The reference to "patience" indicates Fed officials "are trying to give themselves more flexibility," Jay Bryson, global economist at Wells Fargo, told Bloomberg
"This puts the onus on the data, and they can interpret what patience means."
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