In the recent FOMC statement, published by the Federal Reserve, the central bank has held onto the accommodative monetary policy, corroborated by what the board members described as an economy weakened by fiscal policy. The board exclaimed that the interest rates will at its historically low levels while the Fed will also not alter its $85 billion a month asset purchasing program.

The concern of the Fed policy this month has turned towards the downside risks to growth, though the board made little mention of the recent set of weak economic data. However, a slight change was observed in the recent meeting- a declaration that it would increase or decrease the pace of its asset purchases depending on the prevailing conditions of the economy. Esther L. George, President and CEO of the Federal Reserve Bank of Kansas City, again opposed the asset purchase program fearing that massive money-creation could spur inflation. The central bank’s balance sheet has jumped to more than $3.3 trillion. A massive figure to say the least!

"The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes," the statement said. Investors breathed a huge sigh of relief, who have relied on aggressive Fed policy to boost asset prices to spur the economy forward.

The stock markets have moved north to new highs in recent times although the economy remains in slow-growth mode as it has throughout the current Chairman, Ben Bernanke, term, which began before the commencement of the financial crisis. While critics worried about the impending inflation, the Fed continued to conclude that expectations have remained stable.

The next few months could direct the US economy into favored grounds given the stability of positive reports in the recent times. But that’s my opinion, which could completely differ from yours!