A second-quarter economic rebound did nothing to change the outlook of the Federal Reserve, which stayed the course Wednesday with ultra-easy monetary policy.
While the U.S. central bank voted to cut its monthly bond-buying program another $10 billion, it left its short-term interest rate target near zero and expressed only tepid encouragement about growth. The Fed also voted to continue to reinvest proceeds from maturing bonds as its balance sheet swells near the $4.5 trillion mark.
Market reaction was modestly positive to the statement with stocks shaving losses.
There was some thought that the meeting could feature dissent, particularly from Dallas Fed President Richard Fisher, who penned an op-ed piece in the Wall Street Journal earlier this week indicating his dissatisfaction with ultra-easy monetary policy from the U.S. central bank. After the Fed released its meeting statement, several analysts noted "tension" within the language.
However, the sole "no" vote actually came from Philadelphia Fed President Charles Plosser, who said the committee was not adequately taking into account the economic progress. He "objected to the guidance indicating that it likely will be appropriate to maintain the current target range for the federal funds rate for 'a considerable time after the asset purchase program ends,' because such language is time dependent and does not reflect the considerable economic progress that has been made toward the Committee's goals," the meeting statement read.
"The tension inside that meeting must have been significant. … My guess is at turning points it's always hard in that room," said Bob Doll, chief equity strategist at Nuveen Asset management.
The decision came the same day the Department of Commerce reported that gross domestic product increased 4 percent in the second quarter on an annualized basis. Perhaps more importantly, the report indicated that real personal consumption expenditures—part of the Fed's key inflation measure—increased 2.5 percent.