The Fed seems content to use liquidity tools like the term-auctions they’ve set up and has shied away from a rate cut to the surprise of some (me!) and the consternation of others, especially those dealing with the fallout of the Lehman and AIG situations. Bond maven Bill Gross thinks the Fed statement was “otherworldly” given its focus on inflation despite tumbling commodities and asset price deflation in stocks, real estate, etc.
Stocks are taking the move more or less in stride, falling about 100 Dow points but recovering a good deal of that in the last few minutes. USD/JPY has recovered earlier losses and now trades unchanged versus 2:15 at 105.10 while EUR/USD is back up to 1.4115 via 1.4070.