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The Federal Reserve announced it will continue with the course outlined last month. It will reduce the long-term assets it purchases by another $10 bln in February. That will bring its purchases to $65 bln a month, which is still about 50% larger than QE3 when it was initially announced, before Operation Twist purchases were folded into it.

Notably there were no dissents. It is the first unanimous result since 2011. On balance, there were not surprises here.

The forward guidance was unchanged: the short-term interest rates will remain near zero "well past" the decline in unemployment rate falls below 6.5%. There was not mention of the recent emerging market turmoil.

The economic assessment was tweaked a bit to recognize that activity has "picked up in recent quarters" and this will likely be evident with tomorrow's first look at Q4 GDP. Many economists estimate growth to have been around 3% in Q4 after a 4.1% pace in Q3.

Its assessment of the labor market was softened. It said the recent data was "mixed" but on balance showing further improvement. It continued to note the low inflation, but stuck to its medium term view that it will return to 2%.

The dollar and yen strengthened in response and the stock market returned to session lows.

Source: The Fed Stays The Course