(Image Source: Wikimedia Commons)

BY JIM FLINK

ANCHOR ANA COMPAIN-ROMERO

When is doing nothing -- better than doing something?
Apparently -- when it involves the Fed, and tinkering with the economy.
The Fed says the economy is improving -- just enough -- NOT to stimulate it.
The New York Times says The Fed made the decision....

“....citing mounting evidence that the American economy is chugging slowly toward good health.  The Fed said that recent improvements in the economy came despite the deterioration of global conditions, and it noted the continuing risk that a European meltdown could undermine the nascent American recovery.”

Well -- that was anti-climactic.
Hold on -- says Steve Liesman from CNBC.  
There’s something else in the Fed Open Market Committee -- or FOMC -- statement that has real value.

“They’re gonna tell you what the funds rate is gonna be a month, or a quarter, or two quarters or three quarters or a year from now.”
“All of this is borne of a need by the Federal Reserve to use additional tools because of the fact it’s at zero, it’s at the zero bound.  It can’t lower rates any more.”

So, in some senses, The Fed is limited in how much more it can do to make the economy grow.
By announcing how long the fund rate stays low -- it gives the economy a chance to heal itself.
Housing Wire notes...

“The federal funds rate has been 0% to 0.25% since December 2008. And the FOMC reiterated its belief that ‘economic conditions … are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.’"

Some may have been hoping for another round of quantitative easing.
Bloomberg notes, that’s not completely off the table.  

“They haven’t given up completely on the idea of QE3, if you want to read anything into this at all.  They do see inflation continuing to moderate, continue to fall, which would give them scope to do it.  But nothing in this statement suggests they’re any closer to it.  Nothing in this statement suggests they are any closer to anything perhaps, except waiting for January to see how the economy develops.”

That sit and wait policy, might be prudent.
The Street notes, there’s enough uncertainty out there, to justify a careful walk.
It talked with High Frequency Economics economist Ian Shepherdson who says...

"If the sky were to fall in on European banks, more quantitative easing would probably be required to keep U.S. banks stable and operational. But that has not happened yet … It would surely be better, in our view, to wait to see if the economy can manage without further debt monetization, holding it in reserve if it is needed.”

Knowing when to hold ‘em, and when to fold ‘em.
Forbes notes, if that sounds like a poker game -- you’re right.

“Despite keeping its monetary policy unchanged, no one can say Bernanke has been sitting on the sidelines. Bernanke has been able to manage expectations like an orchestra conductor, keeping quantitative easing in the arsenal while making it very clear that he’s ready to pull the trigger if needed.”

ABC notes, markets were expecting the Fed might announce a lower interest rate at the discount window.
The lack of action on that front pushed stocks into negative territory for the day.