The Federal Reserve has three options when it comes to QE3. And it is keeping all of them open.
The Fed's latest policy statement marks a shift from earlier this year, when officials didn't explicitly hold out the possibility of increased bond purchases. Rather, they had begun to openly discuss gradually winding down the program.
"The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes," the Fed said in its official statement.
Oh yea, and if, whatever it does doesn't work, it's not the Fed's fault.
In Wednesday’s statement, the Fed said “fiscal policy is restraining economic growth.” The previous statement, released in March, said “fiscal policy has become somewhat more restrictive.” The change in language struck a chord with at least a few Wall Street strategists.