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.

The Federal Open Market Committee (FOMC) reduced the target Federal Funds Rate and the Discount Rate by 0.25%. The quarter-point cut in the Fed Funds Rate was predicted, although many (myself included) expected the Fed to be much more aggressive in cutting the discount rate, reducing or possibly eliminating the discount window penalty.

The FOMC deleted the reference to a balance between inflation and economic deterioration, although it mentioned that inflationary pressures were still a concern. However, the language describing the recent economic turmoil was relatively restrained.

The Fed gave no assurance that it considers the economic deterioration more serious than inflation, stating that it "will act as needed to foster price stability and sustainable economic growth." It also gave no indications of its course for the future, saying "Today's action, combined with the policy actions taken earlier, should help promote moderate growth over time."

Chairman Ben Bernanke gave a speech this morning to the Cato Institute on Federal Open Market Committee (FOMC) communications. The key points were increasing the number of Fed economic forecast reports from twice a year to quarterly and extending the horizon for projections from two to three years. This is in line with the current Fed's desire to increase transparency.

However, the real message behind the speech was Chairman Bernanke's discussion of the Fed's dual mandate of price stability and maximum employment.

For those inflation hawks who believe that the Fed should strive for zero inflation, the Fed Chairman acknowledged reality by saying that this was inconsistent with the other part of the dual mandate. Although zero inflation is possible, the cost would be too high. Dr. Bernanke is merely stating what most people implicitly understand. He also rejected the claim that this Fed is soft on inflation by indicating that the Fed aims for a very low level.

The Federal Open Market Committee (FOMC) lowered both the Federal Funds Rate and the Discount Rate by 0.50%. This move was designed "to forestall some of the adverse effects on the broader economy" resulting from recent financial market disruptions.

Most people were expecting that both interest rates would only be cut by 0.25%. My forecast had been that the Fed Funds Rate would be cut by 0.25% and the Discount Rate by 0.50%. The market has experienced a rally upon release of the news.

Although the Fed has expressed concern about the moral hazard of a rate cut that rescues financial market participants that assumed too much risk, the rate decision indicates that the economy is its primary concern. As I mentioned in an earlier post, the recent negative unemployment report is the key issue.

The truth about "Fedspeak" is out! You remember "Fedspeak," the language that Alan Greenspan used as the Federal Reserve Chairman to describe the Federal Open Market Committee's decisions and decision-making process. Usually, by the end of his speech, Greenspan left everyone more confused than at the beginning. You only hoped that the Fed and Dr. Greenspan understood what he said.

He has now let the truth about "Fedspeak" out in his new book, The Age of Turbulence. It seems that this confusion was intentional on his part and was meant to prevent unintended jolts to the financial markets from Fed comments. The success of "Fedspeak" in accomplishing this goal will be the source of heated debate for a long time.

Dr. Greenspan also gave pointed comments about each of the previous presidents with whom he worked. This is information that is very interesting from a political and economic historical perspective.

The conclusion from Dr. Greenspan's confession about "Fedspeak" is this: Watch what the Fed does, not necessarily what it says (!) as the two can often be very different. Remember his "Irrational Exuberance" speech in the mid-90s? Apparently Greenspan was trying to talk the market down with that one.

You can find clues to what the Fed is doing in public speeches and pronouncements. However, at FollowtheFed.com I always use the actual data to determine what the Fed is doing. This is especially true in light of Dr. Greenspan's recent confession.

Doug Roberts is the Founder and Chief Investment Strategist for FollowtheFed.com, an independent research firm focusing on investment strategies using the Federal Reserve's impact on the stock prices. He previously held executive positions at Morgan Stanley Group and Sanford C. Bernstein & Co.