FOMC statement lays groundwork for possible further easing

There is no change in the Fed's rate policy, as expected. There is also no change in the Fed's asset purchase plans. The text of the statement finds that the pace of economic expansion has slowed. Recall that in the August 10 statement, it was observed that "the pace of economic recovery is likely to be more modest in the near term than had been anticipated." Now, the similar statement is that "recovery is likely to be modest in the near term" so no apparent deterioration. Also the FOMC added that Employers remain reluctant to add to payrolls, housing starts remain at a depressed level, and that bank lending has continued to contract. All in all, additional quantitative easing is a question of when not if.

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