The Federal Open Market Committee voted to leave the Fed Funds Rate unchanged
within its current target range of 0.000-0.250 percent Wednesday. The vote was
nearly unanimous.
Only one FOMC member, Richmond Federal Reserve President Jeffrey Lacker,
dissented in the 9-1 vote. 
The Fed Funds Rate has been near zero percent since December 2008.
In
its press release, the Federal Reserve noted that the U.S. economy has
"decelerated somewhat" since January. Beyond the next few quarters, though, the
Fed expects growth to "remain moderate" and then gradually pick up.
There was no mention of strain in global financial markets and its threat to
the U.S. economy, as the Fed had made in its last two post-meeting press
releases.
The Fed's statement also included the following observations about the
economy :
- Household spending is "rising at a somewhat slower pace"
- Inflation has declined, mostly on lower oil and gas prices
- Unemployment rates remain "elevated"
Furthermore, the Fed addressed the housing market, stating that, despite
signs of improvement, the sector overall remains "depressed".
The biggest news to come out of the FOMC meeting, though, was that there was
no news.
First, the Federal Reserve is leaving its "Operation Twist" program in place.
Operation Twist sells shorter-term securities off the Federal Reserve's balance
sheet, using the proceeds to purchase longer-term securities. This move puts
"downward pressure on longer-term interest rates" and makes "broader financial
conditions more accommodative."
Second, the Fed re-iterated its pledged to keep the Fed Funds Rate at
"exceptionally low" levels at least through late-2014.
And, third, to Wall Street's surprise, there was no announcement of a third
round of quantitative easing, a market stimulus plan by which the Federal
Reserve buys U.S. treasuries and mortgage-backed bonds on the open market. QE3
would have likely led mortgage rates lower.
The FOMC's next scheduled meeting is a two-day event slated for September
12-13, 2012.
Mortgage markets are rising post-FOMC.