- Lindsey Piegza, chief economist at Sterne Agee & Leach
A document which is also called a Beige Book is used by the U.S. policymakers to assess the current state of the economy. It is released 8 times per year; however, it tends to have a mild market impact, as the FOMC mostly pays its attention two 2 non-public reports– the Green and the Blue Book.
This time, it was not a surprise that the word ‘weather' was mentioned 119 times in the Beige Book released by the Fed this week. The report showed the world's largest economy held on course during the first two months of 2014, even though headwinds from nasty weather impaired growth in some sectors of the economy. Such regions like New York and Philadelphia suffered from a steep decline in activity. At the same time, factories in nine regions struggled with the negative implications of extremely cold weather that disrupted supply chains, production schedules and caused utility outages. Moreover, three districts reported a slower pace of hiring staff, that is why Friday's labour data is likely to have a muted market impact. The document also confirmed that there is a stable price environment in the U.S, with inflationary pressure remaining almost unchanged in all districts of the country.
Despite weather conditions, the Fed is still expected to continue tapering, with some FOMC members being eager to end the QE as soon as possible.
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