Fed Meeting - Reconciling A Weak Economy

The Fed meeting yesterday ended as expected with the Federal Reserve taking no action in terms of implementing further policy actions to boost the financial markets overtly, ie. Quantitative Easing.  The only real "shocker" coming out of the meeting, if you want to call it that, was that the Fed states that they expect to "hold rates at exceptionally low levels until late 2014."   This is an extension of about 1 year from the previous meeting. 

However, that was enough to boost the stock market as the fear of a rise in interest rates, at least from the Fed, has been put on hold for now.  The important take away from this is that, despite the recent reports to the contrary, the economy is much weaker than expected.   If the economy was truly on the verge of a recovery there would be no need to extend exceptionally low rates for such a period of time.

Fed Chairman Ben Bernanke, has little to show after nearly three years of economic weakness and trillions of dollars of financial support as shown in the January meeting statement : "Information received since the Federal Open Market Committee met in December suggests that the economy has been expanding moderately, notwithstanding some slowing in global growth. While indicators point to some further improvement in overall labor market conditions, the unemployment rate remains elevated. Household spending has continued to advance, but growth in business fixed investment has slowed, and the housing sector ...