For those once again thinking they were getting their crack cocaine, quantitative easing, once again they are disappointed.
The FOMC statement showed no change in policy from the Federal Reserve. For the rest of us, the FOMC statement acknowledges our crappy economy.
Information received since the Federal Open Market Committee met in June suggests that economic activity decelerated somewhat over the first half of this year. Growth in employment has been slow in recent months, and the unemployment rate remains elevated. Business fixed investment has continued to advance. Household spending has been rising at a somewhat slower pace than earlier in the year. Despite some further signs of improvement, the housing sector remains depressed. Inflation has declined since earlier this year, mainly reflecting lower prices of crude oil and gasoline, and longer-term inflation expectations have remained stable.
Additionally the Fed doesn't expect things to really improve:
The Committee expects economic growth to remain moderate over coming quarters and then to pick up very gradually. Consequently, the Committee anticipates that the unemployment rate will decline only slowly toward levels that it judges to be consistent with its dual mandate. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee anticipates that inflation over the medium term will run at or below the rate that it judges most consistent with its dual mandate.
As far as policy goes, the Fed kept everything the same. Investors are instead jumping on keyword monitoring that was in the FOMC statement, trying to read futures in Federal Reserve tea leaves. Folks, of course the Fed is monitoring the economy, that's their job. Here's the money shot that is causing quantitative easing junkies to salivate.
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.
What is more amazing is the hype and belief on what the Fed will do by the media and investor class. Repeatedly Ben Bernanke has implied the job to fix the economy is in the hands of Congress. He clearly and forcefully said this just a month ago. Of course Congress does nothing, completely obsessed about election 2012, to the severe detriment of the U.S. economy. The latest Congressional shenanigans are not passing a jobs tax credit for new hires and of course refusing to deal with the fiscal cliff.
We're not surprised that policy has remained the same. For one, past actions have not been effective if anyone bothers to notice the unemployment rate. Bottom line, Ben is right. We have a Congress that sits on their hands with an election full of empty rhetoric, social faux paus gotchas and corporate written agendas and policy.