No word on another round of quantitative easing in the Federal Reserve's latest monetary policy statement, but there were enough changes in the statement's wording to keep economists busy in the afternoon.
Among some of the key shifts, the Fed dropped the "extended period" phrase to describe how long it would keep its key rate at an exceptionally low level and instead opted for something more concrete: expect exceptionally low levels for the federal funds rate "at least through mid-2013."
Yes, this reflects some concern on the part of the Fed to the U.S. economic situation. The statement now says that economic growth this year "has been considerably slower" than expected, a downgrade from the last statement.
Also: "The Committee now expects a somewhat slower pace of recovery over coming quarters than it did at the time of the previous meeting and anticipates that the unemployment rate will decline only gradually...."
Stocks went wild. The Dow Jones industrial average fell about 250 points within minutes after the statement was released, falling into negative territory for the day to a low of about 10,750. The Dow then bounced and was last seen at 10,895, up 85 points or 0.8 per cent.
David Berman