Fed Fudge

   As expected, the U.S. Federal Reserve has backed off any plan to boost interest rates, citing "uncertainty" after its earlier projections for growth. This follows reports that economic conditions in other nations have stalled, coupled with suggestions that the European Central Bank will lower its interest rate to provide another boost to the economy in the European Union.
   The Fed cited the "risks to the forecast for real GDP and inflation were tilted to the downside," according to its report on last month's meeting of the Fed's Open Market Committee. Therefore, "neither monetary nor fiscal policy was well positioned to help the economy withstand substantial adverse shocks."
   We noted earlier this week in this space that stalled growth in Europe would prompt the ECB to further stimulate the economy with lower interest rates, and that would lead the Fed to do likewise, not as a follower, but in a realistic awareness that the U.S. cannot remain an economic island, entire of itself.
   Even  so, the Fed claimed that risks to the economic outlook and the labor market are "nearly balanced," but it is "monitoring global economic and financial developments."
   In the past few days, the economy in China has gone into recession, and that decline in growth has spilled over to Japan.
   Today, the Fed released an unusually long set of minutes from its October meeting, citing "uncertainties" associated with the outlook for economic activity, the labor market and inflation. Consequently, the Fed voted to wait for more information before changing its target interest rate for federal funds from its near-zero level, where it has been for more than five years.
   However, the Fed emphasized that "while no decision has been made," it may act at its next meeting in mid-December, "provided that unanticipated shocks do not adversely affect the economic outlook" and that new data support its plan to boost interest rates.
   That, of course, assumes continuing health in the American economy despite stumbling in the rest of the world.
   Meanwhile, an increase in cost-of-living retirement benefits for Social Security recipients is not planned, as other government agencies point to stalled prices over the past year.
   Tell that to the folks who buy groceries and face rent increases.