What does the Federal Reserve’s somewhat unexpected move to continue with interference in the free market mean to you?
In a nutshell, it means the ability to borrow money cheaply continues for now. And the ability for savers to earn anything of note won’t become a reality anytime soon.
As many people know, the Federal Reserve has found the moves they’ve made to pump up the economy have become less effective over time. So for weeks, they were talking about “tapering,” a code word for slowly reducing — though not entirely stopping — their artifical support of the economy. It was no secret they would dial back, or so everyone thought. But then they voted to continue artificial support.
Why did they decide to punt in this way? Probably because of the breakdown in trust between the political parties in Washington. And the prospect of a government shutdown and possible default on the debt of the United States in the coming weeks.
By deciding not to pull the trigger on tapering, the Federal Reserve is just trying to stay out of it and not mess with what they’d been doing until the dust settles in D.C. Plus, the second half of 2013 was slower economically than the first, so some additional life support remains necessary.