Tuesday’s policy statement by the Federal Reserve was positive, in spite of the immediate market downturn, Jason Trennert, chief investment strategist of Strategas Research, told CNBC Wednesday.
“I think the stock market may be interpreting this the wrong way,” said Trennert. “I view it as quite positive because the size of the balance sheet is at least going to remain unchanged. I don’t think you’re going to have more quantitative easing any time soon.”
He said that Fed Chairman Ben Bernanke also left the door open for the Fed to add to the balance sheet, should the recovery falter and the central bank thinks it’s necessary to take further action.
In downgrading its economic outlook on Tuesday, the Fed said it would reinvest "principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities...and continue to roll over the Federal Reserve's holdings of Treasury securities as they mature."