Fed biding its time

The statement issued today after the end of the two-day FOMC meeting offered no hint that the recent signs of a renewed economic slowdown might tempt the Fed to launch another round of large-scale asset purchases. As Chairman Ben Bernanke explained in his post-meeting press conference, the Fed only acted last year because the low and falling rate of inflation suggested that deflation was becoming a serious threat. The subsequent rebound in core inflation suggests that threat has eased, at least for now.