Seems to me that though forecasts have been revised down, gdp growth continues to improve sequentially quarter to quarter for 2011,

q1 .5
q2 1.0
q3 1.5-2 forecast

And core cpi remains firm with the last 2.0 print.

Congress appears to accept the tax cutting elements of the jobs proposals, which would increase aggregate demand.

All this allows the fed to reflect sufficient (though cautious) optimism with regards to the economy,
giving reason to not make additional adjustments at this time, as many are anticipating.

And short and long rates are already low enough to be causing concern that they are brewing a future bubble of some sort.

Additionally, under their ‘expectations theory’,
that signal of optimism will give the economy more support than the proposed
‘monetary adjustments’ might have.

In fact, if they do make adjustments, they are concerned that will be taken as a no confidence vote from the Fed, and
could, in their minds, cause things to get worse.

furthermore, they are hesitant to make the speculated ‘final’ adjustments, and ‘use up their last bullets’ as they
are more than concerned they won’t have much effect, if any, and they want to at least keep the illusion that
there is more they can do.

But I’m only guessing at this point, and see the following outcomes:

Fed unchanged because the economy isn’t bad enough for an ease helps stocks and hurts bonds.

Fed does something shows the economy is bad enough to need help which hurts stocks and helps bonds.

And either outcome is quickly forgotten after initial market reactions.