Whether the Fed decides to launch QE3 this week is far more a complex decision than they lead us to believe. It is not as simple as monitoring economic data and deciding whether to expand the balance sheet or not.
Yet the Fed rarely discusses what that other criteria is in making such an important decision. The recent Jackson Hole speech by Chairman Bernanke did offer some insight to the other factors, as well as his recent Congressional testimony.
And there are many factors to consider beyond a weaker than expected non-farm payroll. From inflation and market liquidity to balance sheet risk and confidence the Fed needs to weigh all the risks and rewards in finding the right balance.