Fed keeping treasury purchases unchanged

From Bloomberg:

The Federal Reserve refrained from increasing its $1.75 trillion bond-purchase program, said the pace of economic contraction is slowing and predicted inflation will remain “subdued for some time.”

Chairman Ben S. Bernanke is watching to see how quickly the economy can recover from the deepest recession in five decades: Orders for durable goods unexpectedly rose in May, a government report showed today, while unemployment continues to climb. The Fed also wants to quell concerns that the $1 trillion expansion in its balance sheet will fuel inflation, pushing bond yields higher and crippling any rebound in the economy.

Today’s decision was unanimous. The Fed’s $300 billion Treasuries-purchase plan is scheduled to end in mid-September, according to the FOMC statement at the conclusion of the March 17-18 meeting, when it was announced. The Fed also committed to buy up to $1.45 trillion of housing debt this year. At its current rate, the Fed will reach the $300 billion of Treasuries by late August.

Total assets on the central bank’s balance sheet grew $1.17 trillion over the past year to $2.07 trillion as the Fed loaned to banks, commercial paper issuers, and purchased bonds outright to support the flow of credit to consumers and businesses.

The Fed will surely keep interest rates low, that's a bygone conclusion. I think the most important part of this meeting is the purchases of securities and whether it will go up or not. The Fed at this point seems to believe that we are in a recovery and are finally backing up their words with their actions by not lending anymore monetary help with additional purchases.

This statement of confidence is a bit speculative at this point in time. They should expand the purchases but not necessarily spend all of it. Make the purchases at their discretion. Unemployment needs to go down a lot more. I think they are now suddenly caught up with the current market hype of "green shoots."

Even though there are economic indicators showing that the economy is improving, I'm highly skeptical because the unemployment rate is still going up and an incredible rate. We are getting less job losses but higher unemployment. It's tough to predict when unemployment will turn because of changes in the mix of people looking for work.

Economic indicators are great, but unemployment is the bottom line. I won't be entirely convinced until it starts to turn. When people keep seeing 10% unemployment, I think they will think twice about spending. Lets see if the Fed is right or wrong in calling the bottom.