The Fed’s Open Market Committee meeting is over and they announced that they would do—nothing.
I humbly admit that my guess that they would announce QE3 was dead wrong. Alas. The (other) pundits (most of them) were correct. Occasionally it’s good to be humbled.
Their oracular statement was:
The Committee will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.
They voted almost unanimously for this conclusion. [Inflation hawk] Jeffrey Lacker withheld his vote, “who preferred to omit the description of the time period over which economic conditions are likely to warrant an exceptionally low level of the federal funds rate .”
Their statement could be interpreted as being somewhat stronger than last month’s release. Here is a redlined version showing the differences between the two statements (subscription required).
I will still stick by my belief that they will do QE3 at some point, seeing that in a declining economy that is the only policy option (as they see it) they have. Of course that’s is the wrong thing to do. None of these things have worked and they wonder why the economy is faltering.