Fed Disappoints Investors by Withholding QE3 (Update1)
(Updated from 2:33 p.m. EDT with comments from an independent wealth manager.)
NEW YORK (TheStreet) -- The Federal Reserve disappointed investors on Wednesday as the central bank bypassed the possibility of adding more stimulus to the economy.
A report that emerged last week suggested Fed officials had moved closer to so-called QE3, or quantitative easing round III, efforts. But the Federal Open Market Committee revealed more of the same policy as the past few months.
"The Committee will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability," the FOMC wrote in a release.One official, Jeffrey Lacker, voted against the action as he "preferred to omit the description of the time period over which economic conditions are likely to warrant an exceptionally low level of the federal funds rate," the release said. The FOMC said economic conditions were likely to warrant low levels of the federal funds rate at least through late 2014. So what may the Fed's comments mean moving forward for investors? "They're posturing that if we have a rough month in August -- because right now we've been slowing down -- it wouldn't surprise me in September that we're getting ready to go into the [fiscal] fourth quarter to announce some type of stimulus," said Frank Fantozzi, CEO of Planned Financial Services. The statement is essentially in line with previous policy announcements by the Fed, but it is worth noting that the central bank said it would monitor developments "closely." Major equity indices fell after the announcement and the spot price of gold continued its decline downward. -- Written by Joe Deaux in New York. >Contact by Email. Follow @JoeDeaux
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