The important change at today's FOMC meeting was the Fed's acknowledgment that the economic recovery is weakening. The first sentence of its FOMC statement made this point:
Information received since the Federal Open Market Committee met in June indicates that the pace of recovery in output and employment has slowed in recent months.
Another important change was the announcement that they intend to reinvest maturing mortgage-backed securities in longer-term Treasury securities. As expected, the Fed continues to say the same thing about keeping the federal funds rate exceptionally low for an extended period:
The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.
The growing concern about the economic recovery didn't change how Thomas Hoenig's voted. He again voted against the rate policy. According to the FOMC statement:
he believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted and limits the Committee's ability to adjust policy when needed.
Hoenig also didn't agree with the reinvestments in longer-term securities. The lone dissent isn't having much effect.
After the Fed statement, Treasury yields fell to low levels not seen for more than a year. According to Bloomberg, "The 10-year note yield dropped below 2.75 percent for the first time since April 2009."
Until the economy returns to solid growth, I'm afraid savers will probably not see much relief from these record low interest rates.
Future FOMC Meetings
If you want an idea about what the market thinks regarding when the Fed will start hiking rates, check out this CME Group FedWatch tool. It shows you the probability of rate hikes in the future FOMC meetings based on the 30-Day Fed Funds futures prices. The final three FOMC meetings for 2010 are scheduled for September 21, November 2-3 and December 14.