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The Federal Reserve Open Market Committee (FOMC) issued its statement today making its best attempt to be a non-event. The language on interest rates and quantitative easing remained largely unchanged, and the decision was unanimous.
This decision was designed to avoid any potential landmines which could disrupt the financial markets. The FOMC wanted this statement to be a non-event and seems to have largely succeeded.
It had to acknowledge that the economy had improved as Chairman Bernanke had mentioned in previous speeches but does not want to indicate that it will tighten monetary policy in the foreseeable future. The current stabilization has only recently taken hold, and Chairman Bernanke does not want to do anything to damage this.
At the same time, it had to at least acknowledge the prospect of inflation in the distant future and deal with it by saying that it will eventually manage a transition to a normal monetary policy. It has done this very skillfully and leaves all options open.
Ultimately, any economic concerns will be addressed by the Chairman in speeches in which there is less chance of misinterpretation. This minimizes the chances of confusion and disruption in the market. This will be the pattern for the near future.
Now, the market's focus will shift back to other economic news and earnings.
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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