The Fed keeps postponing normal policy action. Why doesn’t it just come out and announce permanently low rates instead of setting ridiculous dates? Clearly that is Fed policy now, as noted in Fed to Keep Rates at Record Lows at Least Through Mid-2013.

The Federal Reserve pledged for the first time to keep its benchmark interest rate at a record low at least through mid-2013 in a bid to revive the flagging recovery after a worldwide stock rout.

The Federal Open Market Committee discussed a range of policy tools to bolster the economy and said it is “prepared to employ these tools as appropriate,” it said in a statement today in Washington. Three members of the FOMC dissented, preferring to maintain the pledge to keep rates low for an “extended period.”

The Fed offered a dimmer view of the economy than it did in the last statement in late June. “Economic growth so far this year has been considerably slower than the committee had expected,” it said. The Fed also said it expects a “somewhat slower pace of recovery over coming quarters,” adding that “downside risks to the economic outlook have increased.”

The Fed left its target for the federal funds rate in a range of zero to 0.25 percent, where it’s been since December 2008. It said it will maintain its policy of reinvesting maturing securities without saying for how long.

Market Reacts With Big “Ho-Hum”

So far we have a mild “sell the news” reaction from the markets that clearly wanted a hint at QE3. I do note that the DOW is already in the red at 1:38 PM central by about 40 points and S&P; futures are sinking fast.

However, recent history suggests that anything can happen within minutes, so we must wait for the final verdict at the close.

In edit, and literally just minutes later, before hitting send, the DOW is down 200, and the S&P; is solidly in the red. Swings in the Nasdaq have been spectacular. I sense everyone is looking for safe havens and there are none.

If this down move holds, expect more wild action in Asia tonight.

Mike “Mish” Shedlock

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