The ""Federal Reserve"":http://www.federalreserve.gov/ restrained itself from announcing any new monetary or fiscal stimulus measures, deciding instead that it will continue to reinvest principal payments for agency debt in mortgage-backed securities while it keeps a heel on historically low interest rates.[IMAGE]
Continuing a public relations tour at a time of increasing unpopularity on both the right and left, Federal Reserve ""Chairman Ben Bernanke"":http://www.federalreserve.gov/aboutthefed/bios/board/bernanke.htm addressed reporters from behind a desk, where he announced that Federal Open Market Committee (FOMC) members may still determine that more economic stimulus is needed.
""Economic conditions are likely to warrant exceptionally low levels for the federal funds rate,"" news networks recorded the Fed chief as saying, adding, ""We are prepared to deploy our tools as appropriate to promote a stronger economic recovery in the context of price stability.""
In a ""statement"":http://www.federalreserve.gov/newsevents/press/monetary/20111102a.htm, the Fed noted that inflation and unemployment rates continue to trump any seasonal recovery in the broader economy, with the latter remaining a chief concern to the FOMC.
The central bank also judged that the housing market remains overwhelmingly depressed ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô a sour albeit accurate note vouchsafed by a number of reports that find[COLUMN_BREAK]
home prices may triple-dip at a time when payroll reports stay at marginal levels.
Writing a widely circulated note, ""Paul Ashworth"":http://www.capitaleconomics.com/staff/global-economics/paul-ashworth.html, chief U.S. economist with consultancy ""Capital Economics"":http://www.capitaleconomics.com/, highlights the Fed's interest in success for the decision to buy up $400 billion long-term Treasury securities.
""The Fed opted to stay on the sidelines today,"" he said. ""Most probably because FOMC members want more time to judge how effective the Operation Twist programme [sic] announced at the last meeting in September has been, but also because the improved tone of the incoming economic data has reduced fears that the US economy was recession bound.""
The decision by the FOMC to hold off on any new stimulus arrives at a time of growing unpopularity for the Fed and more frequent disagreements by members on the board.
Surprising some, Bernanke offered a sober assessment of the social situation by referencing popular unrest toward banks and financial conditions, saying at the press conference that ""we now have a more unequal society than we've had in the past.""
Near-unanimity greeted the FOMC decision Wednesday with the exception of Chicago Fed chief Charles Evans, which the statement credited with pushing for ""additional policy accommodation"" at the time of the meeting.
Ashworth ascribed some interest to the decision by three other FOMC members ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô namely central bankers Richard Fisher, Narayana Kocherlakota, and Charles Plosser ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô to abstain from dissension.
""However, we would be wary of reading too much into this,"" he said. ""In particular, it doesn't mean that they might now be open to further policy stimulus├â┬ó├óÔÇÜ┬¼├é┬ª. [T]he view of the hawks is that once the decision has been made by the majority, it just causes confusion if they continue to vote to roll back action that has already been taken.""