As expected there was no change from the US Federal Reserve after its two day meeting which ended early Thursday morning, Sydney time.
In fact there was nothing there that would frighten the markets, so gold and silver rose after the post-meeting statement was issued and US sharemarkets edged higher and closed at new post June 2008 highs as the easy money policies of the US central bank were continued.
The Australian dollar remained well above $US1.0870 after having hit a new post float high earlier in trading of $US1.085.
The Fed indicated its second round of quantitative easing would end in June, but it would not be shrinking its balance sheet by redeeming maturing bonds, or in effect tightening monetary policy.
Fed chairman, Ben Bernanke told a press conference after the statement was released that this would not have a significant impact on the economy and added that he could not say when the Fed would start to tighten monetary policy.
He underlined the point made in the statement that the Fed would reinvest money from maturing bonds, which has the effect of continuing the cheap money policy that has been in place for more than two years.
Mr Bernanke said the Fed is committed to keeping inflation rates low and stable at between 1.7% to 2% over the long run.
He told the press conference that the Fed expects the recent spike in commodity prices to be temporary, so it decided not to tighten policy.
That means no change in the current record low for its key lever, the Federal Funds Rate, which remains at 0-0.25%.
And, according to the post-meeting statement, there were no dissenters, unlike earlier statements this year.
While saying in its post meeting- statement that the economic recovery was "proceeding at a moderate pace and overall conditions in the labor market are improving gradually," the Fed did say that core inflation remains subdued and too far below the target range (Core inflation in the year to March was 1.2% and headline inflation was 2.1%).
But the central bank raised its inflation estimate for the US and cut its growth forecast, and now sees a slightly better unemployment rate.
The Fed now sees the US economy growing between 3.1% and 3.3% this year, down from a prior projection of 3.4% to 3.9%.
Inflation, they now see the price index for personal consumption expenditure growing between 2.1% and 2.8% this year, compared to the view in January of 1.3% to 1.7% growth.
Some but not much of the PCE increase has filtered into core inflation, which excludes food and energy prices, which is now seen growing between 1.3% and 1.6%, vs. an earlier view of 1% to 1.3%.
The unemployment rate however is now seen falling to a range of 8.4% and 8.7%, against an earlier estimate of 8.8% to 9%.
In its main statement, the Fed said "Household spending and business investment in equipment and software continue to expand. However, investment in nonresidential structures is still weak, and the housing sector continues to be depressed.
"Commodity prices have risen significantly since last summer, and concerns about global supplies of crude oil have contributed to a further increase in oil prices since the Committee met in March.
"Inflation has picked up in recent months, but longer-term inflation expectations have remained stable and measures of underlying inflation are still subdued.
"The unemployment rate remains elevated, and measures of underlying inflation continue to be somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate.
"Increases in the prices of energy and other commodities have pushed up inflation in recent months.
"The Committee expects these effects to be transitory, but it will pay close attention to the evolution of inflation and inflation expectations.
"The Committee continues to anticipate a gradual return to higher levels of resource utilization in a context of price stability.
"To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to continue expanding its holdings of securities as announced in November.
"In particular, the Committee is maintaining its existing policy of reinvesting principal payments from its securities holdings and will complete purchases of $600 billion of longer-term Treasury securities by the end of the current quarter.
"The Committee will regularly review the size and composition of its securities holdings in light of incoming information and is prepared to adjust those holdings as needed to best foster maximum employment and price stability."
