Plenty of econoblog comment overnight on the FOMC's 25 basis point hike in US rates to 5.25%, and speculation about where the Federal Reserve is headed.
Mark Thoma provides a helpful analysis of changes in the wording of the Fed's press release that signal the course of future policy.
Dave Altig at Macroblog agrees the language is more dovish, providing plenty of news headlines and quotes suggesting A Kinder Gentler FOMC? But as he reminds readers, "things do change, and change pretty quickly."
William J Polley reminds us we the Fed is in a "data dependent" mode, and while "I can envision scenarios in which there is a pause in August", the most likely prospect is "one more increase if the data is status quo."
David Gulley at Hypothetical Bias asks: Is the Fed done? His 'bottom line' is that "the Fed has a history of overdoing tightening regimes. To demonstrate his inflation-fighting credentials, Bernanke may continue this pattern."
Ironman at Political Calculations blog calculates that increasing the Federal Funds Rate to 5.25% "will keep the probability of recession occurring in the next 12 months at 27%."
Meanwhile, Bloomberg's Caroline Baume tells us to Relax, It's Six Weeks Until the Next Fed Meeting:
For something that is so widely anticipated and universally agreed upon, we sure spend a lot of time discussing the outcome of each Federal Reserve meeting.
Starting two days before the meeting, a gaggle of economists, investors, futures brokers and former Fed officials, some of whom haven't seen any central bank service for two decades, parade across the TV screen offering nuggets of wisdom. (No shoeshine boys just yet, but increased transparency should open up the field.)
They look thoughtful and sound erudite when they talk about pithy subjects like Fed credibility. I learned just this week that Alan Greenspan had it and Ben Bernanke doesn't. The only way Ben can get it is by 1) being Alan, which is not something anyone else can do, or 2) flexing his muscles and raising rates some more, even if it goes against his better judgment.
I keep reading that Ben has to earn his inflation-fighting credentials without overshooting and sending the economy into a tailspin. None of these armchair quarterbacks throwing up the challenge offer any insight into how to pull it off.