Fed Meets But Doesn't Exceed Market Expectations

      So the median economic forecasters were right. Not really surprised. As usual they choose to err on the side of caution. On the news the market first fell then rallied then finally finished flat, down marginally on the S&P and Dow, up marginally on the Nasdaq.

      In a way this is appropriate as the market expected this no more no less so this is why it didn't end up or down for the day bu that. This suggests that the continuation of Operation Twist was fully priced in to the market.

      Bernanke explicitly stated that QE3 is still on the table:

      "The Federal Reserve, seeing a further slowdown in the US economy, hinted strongly Wednesday that it is prepared to launch a third round of quantitative easing, or QE3."

        "The Fed also lowered its growth projections for 2012 through 2014 and lowered its expectations for new hiring. And both the Fed statement and Chairman Ben Bernanke held out the prospect of more easing, if the economy needs it. "

         "Yes, additional asset purchases are among the things we would consider if we need to take additional measures to strengthen the economy," Bernanke said during his quarterly press briefing.

However, Bernanke warned there is a cost associated with easing programs and they can't be taken lightly."

  "We''re prepared to do more. We have to get additional information on the state of the economy, what's happening in Europe."

    http://www.cnbc.com/id/47887559

    That gets me a little-costs of easing that can't be taken lightly. How light are the costs of not easing? It just seems that every step of the way when there's a danger of doing too much and doing too little the Fed always takes the side of doing too little. A fireman can only wait so long in deciding whether or not to sound the alarm.

   Will Bernanke only be sure when the fire has burned the house down?