They came, the met, they paused. A few reactions and reactions to reactions:
Barry Ritholtz notes -- as does Tim Duy, as does The Skeptical Speculator -- that the Committee "took out a reference to productivity gains' chilling effect on price levels." That makes some sense since, as Michael Mandel points out, we now know that productivity was not as robust over the past three years as we had been figuring. But knzn gets the prize for noting that the revisions to unit labor costs -- the theoretically sound, if not empirically unassailable, predictor of price pressures -- were revised down as well:
Those latest numbers bear watching, of course, but the new estimates clearly suggest that some of the underlying pressure we thought had been building in fact was not.
Speaking of things that bear watching, the FOMC statement included this familiar-sounding bit:
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.
Here is what we will know -- or given the nature of data revision, think we know -- by September 20, when the FOMC is next scheduled to meet: July and August PPI, July and August CPI, July PCE (expenditure and inflation), July existing and new home sales, July durable goods orders and shipments, July retail sales, August employment, July and August industrial production, August ISM indexes for manufacturing and services, and one revision in second quarter GDP and productivity (and unit labor costs).
I'll leave it to you to decide whether that is enough to change anyone's mind, or not.
Elsewhere: Calculated Risk does the round-up of blogworld reactions, and declares the implications for mortgage rates a toss-up. Jim Hamilton gives the pause decision a largely positive review. Mark Thoma has a nice side-by-side comparison of the latest FOMC statement with the statement issued after the June meeting (as does Tim Iacono). Mr. Naybob is not convinced the pause is a stop, a possibility that William Polley believes is plausible as well. Also: Greg Mankiw suggests a change in the FOMC voting procedures. Interesting idea, but I'm not sure replacing binary choices with continuous ones will really help the Committee with its already difficult communications challenges. It certainly won't make calculating our fed funds probabilities any easier.