Seems several reasons Fed unlikely to ‘ease’ further:

GDP continues to move up sequentially since year end

Fed forecasts showing continuing modest growth

Core CPI remains firm

Employment still at least modestly growing (ex Verizon, household sector, etc)

Financial burdens ratios way down indicating the potential for a credit expansion is there.

China and much of the FOMC doesn’t seem to like QE or anything even vaguely related, including long term rate commitments.

Also, with the Swiss ‘peg’ vs the euro, as long as the Swiss remain relatively strong buying the franc, it translates into buying of euro. So this new buyer of euro offers further euro support/deflation to an already highly deflationary environment.

Karim writes:

  • Claims rise 9k to 414k; 400-425k range now holding for about 2mths; not a lot of firing, not a lot of hiring
  • Large drop in trade deficit in July, both nominal and real.
  • Exports rose 3.6% while imports fell 0.2%; supply chain coming back on stream helped industrial exports, while lower oil prices dampened imports
  • Q3 GDP still looking like 2%; forward looking survey measures mixed, with consumer surveys much weaker than business surveys.
  • ECB shifts from ‘inflation risks to upside and policy is accommodative’ to…
  • Inflation risks are ‘balanced’, ‘downside risks’ to growth forecasts (which were reduced), and while policy is still accommodative, financial conditions have tightened
  • While LTROs and SMP help with the transmission of policy, if financial conditions still tighten further, the changed forecasts and biases leave the door open for rate cuts
  • Staff forecasts for inflation were left unchanged at 2.6% for 2011 and 1.7% for 2012; Growth forecasts were cut from 1.9% to 1.6% for 2011, and 1.7% to 1.3% for 2012