The markets seem to have had a rosier view of the US economy than the US Federal Reserve policymakers. Even with somewhat stronger growth and a slightly lower unemployment rate, the slack in the labour market remains a daunting challenge for the Fed to overcome. Even taking account of the demographic shifts toward a lower participation rate, there is little apparent risk of overstimulating. Bernanke said as much while raising the possibility of an accommodating policy even after the target unemployment rate had been reached because of the fall in labour participation. See my wire from 9 September. Also, in the aftermath of the Fed decision, see my 13 September wire about the risk in assuming unquestioningly that the Australian dollar is inevitably going lower. The Fed is unlikely to take account of Australia's needs.