Some economists were predicting QE3, and several were predicting that the Fed was going to change its low-rate guidance language from late-2014 to 2015. That did not happen. There were no new actions announced in today's FOMC policy statement, and the late-2014 language remained the same.
There were some minor changes in the language of the policy statement. The most significant is the Fed's description of the economy in the first sentence. It changed from the following in June:
Information received since the Federal Open Market Committee met in April suggests that the economy has been expanding moderately this year.
To the following today:
Information received since the Federal Open Market Committee met in June suggests that economic activity decelerated somewhat over the first half of this year.
In summary, the economy hasn't worsened enough for the Fed to take new actions. Before the next FOMC meeting, we'll see July and August unemployment reports, and those may spur the Fed into more action. The Fed statement did include the following new language that suggests this:
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.
I would like to think that the Fed has realized that new actions would have little or no effect in terms of improving the economy and lowering the unemployment rate. However, I think most on the FOMC believe more action can be useful if the economy worsens. The only exception may be Jeffrey Lacker, the president of the Federal Reserve Bank of Richmond, who again voted against the policy. Just like in previous meetings, the Statement said that Lacker "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."
Future FOMC Meetings
The remaining FOMC meetings for the year are scheduled for September 12-13, October 23-24 and December 11-12.