By Greg Peel

The Dow fell 138 points, or 0.9%, while the S&P fell 0.9% to 1582 and the Nasdaq lost 0.9%.

The latest Fed monetary policy statement suggested last night that despite signs of recovery, "fiscal policy is restraining growth".

Yes, it's all the politicians' fault. The central bank has been pumping in money and pumping in money and still the US economy is failing to re-establish a comfortable level of growth that might have been expected by now when QE1 was rolled out three and a half years ago. The Fed is doing its bit, it believes, but is hampered by the sequester and resultant budget cuts, which simply act as a counter.

For the past several months, the Fed has stuck to its US$85bn per month bond purchase program, but talked often of how and when it might start easing back. Now that the data have begun to weaken once more, the Fed has become less decisive and, if could be suggested, desperate.

"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."

It is not unusual for a central bank to be on "data watch" ? the RBA does it all the time. But then the RBA watches to see whether a policy change is appropriate. The Fed is now going to increase QE or ease QE as the data determines. It is no longer the omnipotent being with the robust and consistent policy. It will now simply attempt to drive the US economy from the back seat until the US economy damn well gets it right.

This is a policy change that comforts neither side of the QE debate.