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Lead on, Mac-Fed!
The rate makers' obsession with two words may be more toil and trouble than it's worth.
May 3, 2005: 3:38 PM EDT

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NEW YORK (CNN/Money) - As the financial world awaits the Federal Reserve meeting today, and frets over whether or not the Fed will drop the phrase "measured pace" from its policy statement, suddenly it's not the yield curve but Shakespeare that pops into my head.

It's that famous line from "Macbeth" where the king laments the meaning of life: "It is a tale told by an idiot, full of sound and fury, signifying nothing."

Now I am not trying to imply Fed officials are idiots ... far from it. Call me kooky if you must but in all my dealings with them I find them well-intentioned, hardworking, and dedicated to the cause of keeping the economy going and the financial markets on track.

But I think they've gotten way off base with this policy statement thing.

Once again the financial world is obsessing over whether or not the Fed will drop the magic phrase "measured pace" from its statement because as long as it's there it's taken to mean the Fed is going to keep hiking rates 25 basis points at each meeting as it has since last June. But this is nuts!

The minutes of the last meeting made it clear the Fed believes it can do what it wants on rates whenever it wants IF and when the economic data justify a different move (if you don't believe me go back and read them again).

So the "measured pace" phrase is given way too much importance.

The Fed has gotten itself in a weird semantic corner it needs to get out of. And some suspect the reason they stay in this convoluted spot is because within the Fed there's disagreement over what to do next, how far to raise rates, and which is the bigger threat -- inflation or a big oil induced slowdown.

"Out out damn measured pace phrase!" and let's stop obsessing over two words that are holding the Fed and the markets hostage.

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-- Kathleen Hays is economics correspondent for CNN and contributes to Lou Dobbs Tonight. You can read more of her columns here.  Top of page

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