- Global demand appears to be slowing significantly. Conditions in some financial markets have improved, in part reflecting government efforts to provide liquidity and strengthen financial institutions; nevertheless, credit conditions for households and firms remain extremely tight. The Committee anticipates that a gradual recovery in economic activity will begin later this year, but the downside risks to that outlook are significant
- The Committee expects that inflation pressures will remain subdued in coming quarters. Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.
A prediction for a lack of inflation both challenges and contradiction my call for being long on gold. However, the policy taken by the U.S. to save the banks will not be healthy for the U.S. bonds or the U.S. dollar in the long run. Still, in the short run, the U.S. dollar will out-perform other currencies.