economy -- September 18, 2013 at 2:49 PM ET
Decoding Bernanke and the latest Fed decision
Here's a quick and early roundup of some of the thinking behind today's decision and its impact as explained by Neil Irwin from his liveblog of the Ben Bernanke press conference. Neil will be our guest tonight on the program to explain it further.
"As the table of Fed leaders' projections shows, they are considerably more pessimistic about the outlook than they were just three months ago, at the July policy meeting."
"Forget 2013 for a minute. For 2014, Fed officials had expected 3 to 3.5 percent growth back in June. Now those projections are bunched much more closely around 3 percent, with 2.9 to 3.1 percent representing the "central tendency".
"The announcement that the Fed will not pull back just yet on its injections of cash into the economy prompted at euphoric reaction on Wall Street. The Standard & Poor's 500 index was up almost a full percentage point at 2:15, fifteen minutes after the announcement, on expectations that the continued $85 billion a month in money-printing will help keep stock markets propped up.
"In his prepared remarks to begin his news conference, Bernanke also mentioned tight fiscal policy as a factor in recent disappointing economic results--and, implicitly, the Fed's decision not to pull back on bond purchases.
"Federal fiscal policy continues to be a restraint on growth and a source of downside risk," Bernanke said. The latter point, about downside risk, is likely a reference to the looming showdown over funding the government.