The stock market's silly addiction to quantitative easing (QE) was in full view this afternoon.
The Fed raised its 2012 growth estimates (but lowered it slightly for 2013 and 2014), lowered its unemployment estimate, and slightly raised its inflation forecast.
This was largely good news. But not in the topsy-turvy world of QE. That forecast sounded like QE was less likely. Stocks sold off.
Then, during the press conference, Mr. Bernanke dropped all the right QE watchwords: the Fed "remains prepared to do more" to help the economy and "remains prepared to use balance sheet tools."
Stocks rose, albeit briefly. Mr. Bernanke is cagey, suggesting the bar for QE is high — that trying to get higher inflation to help employment would be "reckless."
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