The Fed's Act II: Repeat Act I

By Michael Wallace

It seems appropriate that the Federal Reserve's latest policy announcement came on Feb. 2 -- Groundhog Day. Like the central character played by Bill Murray in the movie with the same name, investors and market watchers who read the central bank's policy statement issued after its two-day meeting must have gotten a sense that they'd seen this all before.

And they'd be right. Similar to its last meeting on Dec. 14, the Fed slavishly fulfilled market expectations by lifting the Fed funds rate by a quarter-point increment (it's now at 2.5%) and kept to its "measured" policy schedule. What was remarkable in the statement: The near-absence of any alteration in the boilerplate language from the one issued Dec. 14 with respect to policy, the economy, and inflation.

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