Wall Street had another up and down day yesterday, failing to muster any sort of rally by the closing bell. At day’s end the Dow Jones was leading the way with a 0.16 percent (17.46 points) rise, followed a bit further behind by the S&P 500 (0.52 points, 0.05 percent). The NASDAQ actually fell on the day, settling down 5.45 points (0.23 percent).

Premarket momentum indicated that stocks would rise at the opening bell, but investors will likely stand pat for much of the day until the Federal Reserve’s policy statement at 2:15pm.

According to Bloomberg News, one key goal of the Fed’s updated policy will likely be to fight inflation risks during the next several years. However, rather than fighting to keep prices down, it is likely that the Fed will move to make sure that inflation stays steady and does not fall too low.

Chairman Bernanke has always said that he much prefers an economy with some degree of inflation, and thus market liquidity, to an economy with little inflationary price increase. He places fear of monetary deflation far ahead of monetary inflation.

In other news, Senate Banking Committee Chairman Chris Dodd (D-Connecticut), proposed a new system of Wall Street regulation and reform yesterday. According to CNNMoney.com, the reforms aim to ward off future collapses of the financial and banking industry.

However, the reform package is obviously a watered-down version of a previous version, which Dodd was unable to find support for. The new package will create a consumer regulator within the Fed tasked with ensuring fairness for consumers. This is similar to the prior consumer regulator proposal that would have created a completely separate entity.

The Fed regulator would likely favor the banking industry in much the same way the Fed already does. Having some form of protection for consumers is better than nothing, but in the end the new ”reform” falls far short.

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