The Federal Open Market Committee issued its statement in which it indicated that it will keep short-term benchmark rates low for the foreseeable future. This was not really new and was expected. However, the bigger question was the Fed's stance on quantitative easing, the unconventional methods to keep credit flowing in the economy.
The Fed clearly indicated that it will continue to provide credit directly to those in need using the newly developed special programs, such as the Term Asset-Backed Securities Loan Facility, as the primary vehicles. It is focusing on the most effective means to keep credit flowing.
The Fed indicated that it will continue to maintain its role as lender of last and currently only resort. Longer-term Treasury securities may be purchased if deemed effective. The market appears to have been looking for some confirmation of continuing support and received it.
There were also indications that rates might remain low even if inflation unexpectedly rose. Clearly, the economy is the primary focus on the Fed's agenda. Thus far, the equity markets seem to have greeted this positively. However, long Treasury Bond prices have dropped.
Doug Roberts is the Founder and Chief Investment Strategist for ChannelCapitalResearch.com, an independent research firm focusing on investment strategies using the Federal Reserve's impact on the stock prices.
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