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SHOCKER: Fed Holds Rates Unchanged

Remember when you waited on tenterhooks when the Federal Reserve’s Open Market Committee was meeting. Would they raise rates? Lower them? Leave them unchanged? How should you trade the announcement?

Federal Reserve
AP
Federal Reserve

These days are just plain boring. No one is shocked that the Federal Reserve will not alter its 0 to 1 /4 percent federal funds rate target. And we knew all the back in November that quantitative easing was back on.

Even the Fed seems bored with its actions. Rather than opening their statement with an enumeration of policy actions, the Fed led with this: "Information received since the Federal Open Market Committee met in November confirms that the economic recovery is continuing, though at a rate that has been insufficient to bring down unemployment."

Their summary of economic data goes on to reveal the following:

"Household spending is increasing at a moderate pace, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit.

(Sigh. You could learn similar facts, stated in more accurate and less tedious language, at your neighborhood tavern.)

All members of the FOMC voted in favor of the policy action—except Thomas Hoenig. Even the dissent is becoming predicitable.

"Mr. Hoenig was concerned that a continued high level of monetary accommodation would increase the risks of future economic and financial imbalances and, over time, would cause an increase in long-term inflation expectations that could destabilize the economy," Fah-ahm-K said.

By the way, do you know what a tenterhook is? You probably should, just in case you are ever waiting on tenterhooks again. It was a hook used in the stretching of wool while it tried after being cleaned. Back in the day, you would see fields and fields of wool being stretched out on tenterhooks.

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