Little of note in the statement: no QE3 explicitly in the form of LSAP, which an S&P over 1300 and crude at $100 made prohibitive. Instead the Fed is extending ZIRP through 2014, from 2013, which as commentarors, primarily Goldman had expected, and which means sub-3 year rates will never be above zero again. Our prediction for a €100 trillion 1 week MRO is not looking quite as insane anymore. Since this is incremental easing, the reaction in gold says it all.
Summary headlines via BBG:
- FED EXPECTS TO MAINTAIN `HIGHLY ACCOMMODATIVE' MONETARY POLICY
- FED SEES `EXCEPTIONALLY LOW' RATES THROUGH AT LEAST LATE 2014
- FED TO KEEP REINVESTING HOUSING DEBT INTO MORTGAGE SECURITIES
- FED SAYS INFLATION `SUBDUED'
- FED SAYS HOUSING `REMAINS DEPRESSED'
- FED REITERATES `SIGNIFICANT DOWNSIDE RISKS'
Gold:
[4]
Lacker objects as he "preferred to omit the description of the time period over which economic conditions are likely to warrant exceptionally low levels of the federal funds rate." Complete redline comparison attached.