Panic? Or just precaution? Take your choice of "P" words, but there's no question Federal Reserve Chairman Ben Bernanke and all but one of his fellow policymakers took a calculated risk in deciding to go in for what amounts to some additional monetary stimulus at their Aug. 10 Federal Open Market Committee meeting.
In deciding not to allow the natural shrinkage of the central bank's balance sheet that otherwise would have taken place, the FOMC was basically announcing to all the world that it has lost confidence in the economic recovery. It was not only signaling that the downside risks to economic growth have intensified, but also, implicitly, that deflationary threats have worsened.
For more: Analysis: FOMC Move a Signal of Alarm About Econ, Infl Outlk | Real Time Market News | Need to Know News
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