Yoda and the Yetti

If Greenspan was the Yoda,

Is Bernanke the Yetti?

The Little-Noticed `Yet' in the Fed's Statement: John M. Berry

What a powerful word ``yet'' can be in the hands of Federal Reserve officials.

The Federal Open Market Committee yesterday raised its overnight lending rate target by a quarter-percentage point, to 5 percent, as everyone expected.

It was in the statement explaining what may come next that ``yet'' appeared, signaling that after boosting the target at 16 consecutive meetings the committee probably will take a pass late next month.

After the previous meeting on March 28, the statement said, ``The committee judges that some further policy firming may be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance.''

Yesterday it read, ``The committee judges that some further policy firming may yet be needed to address inflation risks but emphasizes that the extent and timing of any such firming will depend importantly on the evolution of the economic outlook as implied by incoming information.''

In March, the FOMC didn't want to say flatly that it intended to raise rates at its next meeting. On the other hand, that was what it wanted financial markets to anticipate, and they did.

This time, saying that ``some policy firming may yet be needed'' is intended to tell the market two things. First, the committee doesn't think, at this point, that a rate increase will be needed on June 29. Second, even if there were no move then, it wouldn't rule out one or more increases later in the year.

After yesterday's announcement, some analysts said they expect that strong data released between now and the end of June will cause the FOMC to raise the target to 5.25 percent at that point.

That's possible, yet -- to use that word -- it would happen only if the new data caused the Fed to decide its forecast of moderating economic growth was wrong, or if tight labor and product markets, combined with high oil and commodity prices, caused core inflation to get worse.

Well, I don't know what's going on with core inflation, but shipping rates to Guam have been raised, YET AGAIN, for the third time this year:

The cost of goods on island, from canned meats to furniture, could go up as a result of a decision by a major shipper to raise its fuel surcharge for a third time this year.

Matson Navigation Co. yesterday said it is raising its fuel surcharge for service to Guam, the Northern Mariana Islands and Hawaii to 21.25 percent from 18.5 percent, effective June 4.

Shipping companies levy fuel surcharges to help offset fuel-related costs. The fuel surcharge increase, local store owners and distributors have said, will ultimately be passed on to consumers.
"While this 3.5-percent increase represents a very significant increase, no transportation company can ignore the serious impact of record high fuel prices and the volatility of the current world oil market," Dave Hoppes, senior vice president, ocean services, told The Associated Press.

Matson officials on Guam could not be reached for comment yesterday.