No taper yet. Equities, long bonds, and gold rally. The FOMC says that any change to policy is contingent on almost everything.

They shaded their views of housing down and GDP up.

Longer statement. They think that if they use more words, they will be clearer. Longer statements are harder to parse and understand.

Current proposed policy is an exercise in wishful thinking. Monetary policy does not work in reducing unemployment, and I think we should end the charade.

In the past I have said, “When [holding down longer-term rates on the highest-quality debt] doesn’t work, what will they do? I have to imagine that they are wondering whether QE works at all, given the recent rise in long rates. The Fed is playing with forces bigger than themselves, and it isn’t dawning on them yet.

The key variables on Fed Policy are capacity utilization, unemployment, inflation trends, and inflation expectations. As a result, the FOMC ain’t moving rates up, absent increases in employment, or a US Dollar crisis. Labor employment is the key metric.

GDP growth is not improving much if at all, and much of the unemployment rate improvement comes more from discouraged workers, and part-time workers.