Fed Kicks The Can Down The Road
The Fed made no substantial changes to policy or the statement. The key sentence on “exceptionally low levels of the federal funds rate for an extended period of time” was unchanged. Essentially, they didn’t want to take any chances of disrupting the fragile recovery and will kick the can down the road as far as the dollar and inflation.
As far as inflation, they continue to “expect that inflation will remain subdued for some time”. What about the roaring financial markets? What about gold near $1100? What about the dollar getting crushed? Not an issue, apparently.
At some point, they’ll have to start to remove their enormously easy monetary policy. But they’ll put it off as long as possible. The next FOMC decision is in 6 weeks on December 16th. Things will be very interesting between now and then. Will the dollar hold up? Will gold explode? Will the stock market collapse anyways? Will it explode higher?