Fed Meeting - Economy Weaker Than Expected

The Fed meeting ended today as expected with the Federal Reserve taking no action in terms of implementing further policy actions to boost the financial markets overtly.  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.

The key complication for the Fed, as shown by their continued debate on future actions, is how to meet their dual mandate of creating "full" employment without stoking inflationary pressures.   With inflation running at better than a 3% clip and unemployment remaining stubbornly high, despite trillions of dollars of injections, their ability to accomplish that task appears to be running short on time and options.

Fed Chairman Ben Bernanke, has little to show after nearly three years of economic weakness and massive financial support. "Information received since the Federal Open Market Committee met in December suggests ...