Ben Bernanke and the FOMC have decided to keep rates at roughly zero-percent all over again.  The good news here is that we are seeing more hints that the end of QE2, quantitative easing, will not blossom into a new round via QE3.  The key we would note as ‘the takeaway’ is that the bias seems to be more “moderate growth” rather than “firming growth” but the other statements seem consistent with prior reports.

The vote was 10-0 for keeping rates on hold with Fed Funds at the target 0.00% to 0.25%.  The discount rate was also kept flat at 0.75%.  The Federal Reserve did reaffirm that is ending Treasury securities purchases in June.  Its ‘out’ that was left is that the FOMC will keep reinvesting proceeds from maturing securities and that it would ‘regularly review the size and composition of the assets held.

The policy also kept this “exceptionally low for an extended period of time” in its rate outlook.

As far as the economy, inflationary pressures were at least noted but the issues brought up were “transitory” rises in commodities and a large gain in oil prices.  The promise to is to pay close attention to inflation and to expectations.

As far as the recovery… Bernanke called it proceeding at a moderate pace.  The labor market was called again as improving gradually but with elevated unemployment.  Bernenake also noted that business and household spending continue to rise.  The admission on housing is that it remains depressed.

Unfortunately, this is all just as we expected. That means this was just a prelude to the body language of Ben Bernanke when he gives his live press conference this afternoon.

Dear Ben, “The idea of a press conference is a bad one.  No Fed Head has ever spoken in a manner that would make this a good thing.  When you get attacked by the media today, just remember that you have to stand by your same statements.”

JON C. OGG

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