As they should have but maybe to the dismay of some, the Fed decided not to give into market peer pressure and they sat put. They did not change the time frame that rates would stay “exceptionally low,” they did not lower interest rates on reserves and they did not announce any new money printing exercises. But, this doesn’t mean they won’t act in Sept as they said information received since their June meeting “suggests that economic activity decelerated somewhat over the first half of this year.” They also added this (in brackets) to the statement that wasn’t there in June, “{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…” If the economy doesn’t improve by mid Sept, the Fed will do more QE I have little doubt. This said and while the Fed remains the topic of discussion today, Mario Draghi kicked Bernanke off the stage last week and all eyes are on Europe and what Draghi follows thru with tomorrow, if at all.
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