The Federal Reserve decided to leave their target rate unchanged at 0.00-0.25% at the conclusion of today’s meeting.  This was no surprise, nor was their continued use of the language pertaining to their policy of “exceptionally low interest rates at least through mid-2013.”  The statement noted “some improvement” in labor market conditions and the economy overall was “expanding moderately.”  Inflation was also noted as having moderated, versus the “appearance” of moderation last month. 

The FOMC continues to provide a cautious tone in their growth outlook for the near-term, however, particularly in reference to slowing global growth.  Due to stress in global financial markets (Europe), they reiterated their risks of “significant downside risks to the economic outlook.”

Overall, the overall tone and commentary is not at all out of line with what we expected—very similar to that of recent meetings.  Some of these languages changes seem minor, but the decisions about what is changed and when can add insight into their decision-making process.  Improving domestic data and employment was a positive and is very consistent with data we have been reviewing in recent months.  We expect that some of the intangible/political uncertainty and tempered language could dissipate as conditions in Europe are resolved.