The Fed said this afternoon that it ‘sees signs recession may be easing’ and that the economic outlook has “improved modestly” since last month. That said, the Fed left the interest rate at 0.00% – 0.25%, and decided against taking any new steps to shore up the economy. Fed policymakers offered a less dour assessment of the economy than the one it provided in mid-March, saying:

• the economy has continued to contract, though the pace of contraction appears to be somewhat slower;

• economic activity is likely to remain weak for a time;

• while consumer spending has shown signs of stabilizing, it is still being constrained by rising unemployment, falling home values, and hard-to-get credit; and,

• weak sales and credit difficulties have forced businesses to cut spending and lay off workers.

The Fed’s statements are not what generally was expected – see earlier posts today. What the Fed said today is nothing new. I suspect the Fed is taking a ‘wait and see’ attitude – and the Mr. Bernanke not only has all of his fingers crossed, but all of his toes crossed as well.

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