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The Fed Signal: Steady as She Goes

Wednesday, 30 Jan 2013 | 3:22 PM ET
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The Fed Statement: steady as she goes.

Traders cared about two things in this Fed statement:

  1. Outlook on the economy
  2. Future of QE

1) The Economy. On the surface, it looks like the Fed outlook for the economy was more downbeat. In the first sentence, the Fed noted that "growth in economic activity paused in recent months," but then went on to say these were merely due to "weather-related disruptions and other transitory factors".

In other words, the Fed is not that worried. I wonder if they added that sentence after the dismal Q4 GDP figure came out this morning.

Regardless. The key phrase on the economy remained: "the Committee continues to see downside risks to the economic outlook," though they did remove the word "significant".

2) QE. The Fed answered in the affirmative, exactly reproducing its statement from the December 12 FOMC meeting: "the Committee will continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month".

And they will keep doing it, again repeating the same sentence as the December 12 release: "...the Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until such improvement is achieved in a context of price stability".


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  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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