The Fed just admitted that they don't expect the economy to improve until mid-2013.

[Pale Blue Dot]

And the "recovery" has been weaker than they thought.

Fed says it will hold rates fast until mid-2013

The Federal Reserve says it will likely keep interest rates at record lows for the next two years after acknowledging that the U.S. economy is weaker than it had thought with increasing risks.

The Fed announced that it expects to keep its key interest rate near zero through mid-2013. It has been at that record low since December 2008. The Fed had previously only said that it would keep it low for "an extended period."

The more explicit time frame is aimed at calming nervous investors, giving them a clearer picture of how long they will be able to obtain ultra-cheap credit.

Stocks, which had rallied earlier in the day after a series of sessions with major losses, began to lose momentum in the hour before the central bank's statement. The major indexes were trading mixed immediately after the statement.

http://www.msnbc.msn.com/id/44064023/ns/business-stocks_and_economy/#.TkF8OIJEOkM

Stocks dropped like a stone after this announcement.

[valerief]

1. When batshit crazy President Perry Noid is in office. nt

[RKP5637]

3. Yeah, some compulsory prayer sessions at gun point ought to do it, and imprisoning

all the gays or worse, yep, that ought to fix it. Go Perry Go!!!

[rfranklin]

2. They're waiting for President Romney to take over...

then everything will be hunky dory!

[DJ13]

4. Dow now down 130 pts

Gold way up.

[PoliticAverse]

5. Is it a 'lost decade' yet ?... n/t

[gkhouston]

6. Fed finally realizing that there is no such thing as a jobless recovery?

About fucking time.

[girl gone mad]

7. Why would it?

There is absolutely no driver for growth or jobs. The Federal government is the only entity that can pump dollars into the economy right now, but their focus is on deficit reduction. Crazy!

[Pale Blue Dot]

8. Exactly. The only news here is that the Fed is making a tentative step towards honesty. nt

[Ghost Dog]

9. Full FOMC Statement:

There are two key changes.

First, the Fed has given a semi-specific date for the continuation of the federal funds rate at “exceptionally low levels”. It says that “low rates of resource utilization and a subdued outlook for inflation over the medium run” warrant maintaining current rates until “at least” 2013.

Second, it has stronger suggestive language on other forms intervention (such as Operation Twist).

The final paragraph is a new one, and reflects no doubt heated discussion about what to do next...

/... http://ftalphaville.ft.com/blog/2011/08/09/648536/fomc-statement-9-august-2011/

Information received since the Federal Open Market Committee met in June indicates that economic growth so far this year has been considerably slower than the Committee had expected. Indicators suggest a deterioration in overall labor market conditions in recent months, and the unemployment rate has moved up. Household spending has flattened out, investment in nonresidential structures is still weak, and the housing sector remains depressed. However, business investment in equipment and software continues to expand. Temporary factors, including the damping effect of higher food and energy prices on consumer purchasing power and spending as well as supply chain disruptions associated with the tragic events in Japan, appear to account for only some of the recent weakness in economic activity. Inflation picked up earlier in the year, mainly reflecting higher prices for some commodities and imported goods, as well as the supply chain disruptions. More recently, inflation has moderated as prices of energy and some commodities have declined from their earlier peaks. Longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee now expects a somewhat slower pace of recovery over coming quarters than it did at the time of the previous meeting and anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Moreover, downside risks to the economic outlook have increased. The Committee also anticipates that inflation will settle, over coming quarters, at levels at or below those consistent with the Committee's dual mandate as the effects of past energy and other commodity price increases dissipate further. However, the Committee will continue to pay close attention to the evolution of inflation and inflation expectations.

To promote the ongoing economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent. The Committee currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013. The Committee also will maintain its existing policy of reinvesting principal payments from its securities holdings. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.

The Committee discussed the range of policy tools available to promote a stronger economic recovery in a context of price stability. It will continue to assess the economic outlook in light of incoming information and is prepared to employ these tools as appropriate.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen.

Voting against the action were: Richard W. Fisher, Narayana Kocherlakota, and Charles I. Plosser, who would have preferred to continue to describe economic conditions as likely to warrant exceptionally low levels for the federal funds rate for an extended period.

/... http://www.federalreserve.gov/newsevents/press/monetary/20110809a.htm