Randomly Noted

There better not be any itchy fingers at the Federal Reserve. They won’t be getting any exercise.

It’s been a long time since U.S. central bankers have had the economic or market stimuli needed to spur their discretion over interest rate policy. Late 2008 to be precise.

That’s when the Fed decided the economy was so dire as to require zero short-term rates to revive it.

It’s going to be a long time still before short-term official interest rates climb from there. That’s a remarkable situation, but the Fed might not tighten monetary policy, even modestly, until the second half of 2011, given the economic climate.

That would make it something like two-and-a-half years at zero short rates in an effort to get the U.S. economy off the mat. Amazing.

You’ve got to hope Fed officials have some outside interests.

Even the famous “extended period” phrase has gotten an extended life. A few months back when the U.S. economy was perkier and Europe’s sovereign debt and related banking situation didn’t look so dire, you could at least debate whether the Fed should drop its phrasing that it expected zero short rates to remain in force for an “extended period.”

This columnist was among those who thought it was time to at least drop “extended period,” lend a little drama to the situation. Let the world know zero couldn’t go on forever.

Perhaps Thomas Hoenig, the president of the Federal Reserve bank of Kansas City, is the last true believer. In the statement that punctuated today’s end of another rate-setting meeting of the Federal Open Market Committee, Hoenig was cited again as a lone dissenter. He thinks the time has come to get rid of the “extended period” phrasing.

But even since the Fed last met on rates in late April the economic outlook has softened, the market situation become more uncertain. What looked already in April like a long slog of unsatisfactorily low U.S. economic growth now looks like growth at even a more sluggish pace.

The inflation threat looks even further removed. “Prices of energy and other commodities have declined somewhat in recent months,” the Fed said today, “and underlying inflation has trended lower.”

The Fed’s at zero and the environment offers nowhere for the central bankers to go. Maybe a few golf outings are in order.