What the Fed Really Said

Why do so many traders refuse to listen to what the Federal Reserve is telling us? Why are they so insistent that there is a hidden agenda or that the Fed is lying in wait to surprise us all? Headlines abounded that the Fed was closer to ending its latest iteration of quantitative easing than we thought based on minutes released Thursday afternoon. Not only did this represent a misreading of the minutes, but a gross misreading of the Fed's goals for QE.

The Fed's strategy has changed from reacting to economic slowdowns to actively trying to accelerate growth. In a release after December's Federal Open Market Committee meeting, this was described in terms of keeping monetary accommodation at least until unemployment is below 6.5% or inflation is above 2.5%. But really, what the Fed is saying is that it has to use the tools at its disposal to spur economic activity and keep monetary stimulus going until either growth has reached its goals or inflation starts to get out of control....516 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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