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Fed Meeting Ends With No Taper
Posted at 3:03 p.m. on Sept. 18, 2013
The Federal Open Market Committee released its latest policy statement, announcing that it will continue its quantitative easing program at the current level and hold back on tapering for now.
Key lines from the statement: “The Committee sees the downside risks to the outlook for the economy and the labor market as having diminished, on net, since last fall, but the tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labor market… the Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases.”
Cullen Roche: “The short version – we aren’t ‘tapering’ because we think the economy might be weaker than previously expected.”
Matthew Yglesias: “The punchline is that the tightening of financial conditions in recent months was caused by … rumors that the Fed was going to taper.”
Bill McBride: “With the downgrade to GDP and inflation (for 2014), it makes sense that the Fed decided to wait for more data.”
Tim Duy: “Holding off on tapering also achieves two other objectives. The first is to make clear that policy is data dependent… The second – assuming we now have an Octaber to look forward to – is that the Fed can prove it can change policy in meetings not followed by a press conference.”
Scott Sumner: “Fed does what it said it would do—make its decisions based on the data. Good for them, and good for policy credibility.”