Absolutely no sign of a third round of quantitative easing. That was the big news from today's statement from the Federal Reserve. The stance of monetary policy remains unchanged.
The only alterations to the Fed's statement, compared to what it released after the last meeting on January 25, indicated somewhat faster economic growth and higher inflation.
The Fed said unemployment "has declined notably," growth in coming quarters should be "moderate" (last time it said "modest"), and that strains in global financial markets have eased. On inflation, the Fed acknowledged that crude oil and gas prices have risen lately, but says these increases will only keep inflation up "temporarily."
Otherwise, the Fed made no changes to interest rates, the size of its balance sheet, or its policy of paying interest on excess reserves. In other words, no third round of quantitative easing. Given the re-acceleration in the economy we continue to think QE3 is a ship that will never sail.
Once again, the only dissent came from Richmond Bank President Jeffrey Lacker, who believes economic conditions will warrant raising rates before late 2014.
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