August 1, 2012
The two-day Federal Reserve policy meeting wrapped up today, and the conclusion is…drum-roll please…mostly more of the same.
The Fed reaffirmed their plans to keep the benchmark interest rate near zero through 2014, along with the previously announced program of bond purchases designed to keep long-term interest rates low.
Federal Reserve officials did say that they were aware of intensifying concerns about the economic outlook and gave a stronger indication that they are moving closer to further action, but left a widely-expected option to commit to low interest rates through 2015 on the table.
As I've said before, no matter who is at the helm in the Fed, the "Fedspeak" is always the same—vague and non-committal.
The bottom line is that the Fed is limited in what it can do at this point and they're already using the biggest tools in their toolbox.
Other tools that the Fed could use in the future include a third major bond-buying program, and some market observers have stated that it could be targeted towards buying mortgage-backed securities in an effort to stimulate the housing market.
The fact is that interest rates can't go below zero, and our best strategy going forward is to focus on the fundamentals by investing in stocks that are able to post strong sales and earnings no matter what the latest Fed action.