The FOMC likes firm foots in their minutes.

At the March 15^th FOMC meeting stated that the recovery is gaining strength and they plan to adhere to their $75 Billion in Long-Term Treasury bonds each month through June 2011. The chart below shows the Fed’s balance sheet composition over the past four years and although the minutes mention a tapering effect taking place in the purchase of Treasury securities the obvious effect is shown by the treasury yield curve steepening.

Although the Fed officials admit in continuing downside risk in the US housing market and the ramifications of the European fiscal adjustments their chosen word for economic growth is their belief in a “firmer footing.” The committee also expects economic conditions including low rates of resource utilization, subdued inflation trends and stable inflation expectations, to warrant exceptionally low levels for the federal funds rate for an extended period.

My concern is when the Fed planes their exist strategy, how do they plan to tackle the obvious inflation and unemployment situation. Just remember that even when the US was in an obvious recession back in Feb 2008 Uncle Ben stated that he doesn’t foresee any recession and that it’s simply a correction in the markets.

http://www.federalreserve.gov/newsevents/press/monetary/fomcminutes20110315.pdf