Whither the Fed

The Fed left rates unchanged yesterday and shifted to a neutral bias, i.e. they are no longer inclined to raise rates the next time they move. So goes consensus after yesterday's decision.

I think the Fed is in a no-huddle offense whereas a "neutral bias" would imply that the Fed is playing defense. Bernanke wants to get this right and there is a lot of bad stuff still in the system. The market is self-correcting in the long term but the Fed Chairman is likely to do anything he can in the short term to avoid further damage to the financials and/or the economy.

Absent a better market, I wouldn't be surprised to see lower rates ahead. Could be bad news for the U.S. dollar though.