The Federal Reserve Open Market Committee (FOMC) issued its statement almost exactly as expected. The language on interest rates is remaining low for an extended period of time remained largely unchanged, and the decision was unanimous.
As I have mentioned earlier, the Fed continues to avoid any potential language which could disrupt the financial markets. Any potentially controversial ideas seem to be reserved for speeches by the Chairman and other government officials.
Chairman Bernanke does not want to do anything to damage the current stabilization in the economy. Politically, it will also be extremely difficult for the Fed to tighten monetary policy until the employment situation improves, as long as inflation remains subdued.
The only real attempt to mollify the monetary inflation hawks was to decrease the target purchase of agency debt from $200 billion to $175 billion. However, this is not necessarily significant in light of other Fed programs.
The Fed will most likely utilize speeches by Fed officials to telegraph any significant changes in monetary policy to minimize the chances of confusion and disruption in the market. This has been and will continue be the pattern for the near future.
Now, the market's focus will shift back to other economic news, earnings, and the next Fed meeting.
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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