Fed on US monetary policy

The US Federal Reserve left monetary policy on hold on Wednesday and offered a moderately brighter economic outlook, but it flagged risks to growth that appeared to leave open the door for further easing. While the US central bank offered no direct hints it was considering fresh steps to help the economy, one official pushed for action. In the end, the Fed mustered a 9-1 vote for a steady course.
"Economic growth strengthened somewhat in the third quarter," the central bank said in a post-meeting statement. "Nonetheless, recent indicators point to continuing weakness in overall labour market conditions, and the unemployment rate remains elevated." Charles Evans, president of the Chicago Federal Reserve Bank, dissented because he wanted the central bank to ease policy at this meeting, while the three officials who had voted against an easing in September supported the consensus.
"That we don't have the dissension from the hawks is encouraging and suggests there might be support for more quantitative easing at some point, if necessary," said Gary Thayer, chief macro strategist at Wells Fargo Advisors in St. Louis, Missouri. "It leaves the door open for more easing."
Still, the Fed was silent on whether it was considering the possibility of further bond purchases and provided no insight into the status of discussions on overhauling its communications policies. Officials had been debating both courses of action in the lead up to the meeting.
As usual, the central bank simply kept its options open, reiterating that it was prepared to adjust its balance sheet as needed to foster recovery. The central bank's debate over the course of policy comes against a troubled global backdrop and with the US economy far from full health.
Greece's call for a referendum on the latest eurozone debt deal dashed hopes Europe had finally come to grips with its debt crisis, sending global equity markets into a tailspin. The US recovery, for its part, remains anaemic and could be knocked off course if Europe fails to quell its crisis, a concern the Fed alluded to. The economy grew at a 2.5 percent annual pace in the third quarter, a significant improvement over the second quarter's 1.3 percent increase but still too soft to put a dent in the nation's 9.1 percent unemployment rate.