Instant Analysis of Today’s March FOMC Statement
- FOMC removes “patient” language- a June or Sept. liftoff on the table, April ruled out.
- New guidance – FOMC must see further improvement in the labor market and be
- reasonably confident that inflation will move back to 2 percent over medium term
- Fewer “Hawks” on the Committee pushes median dot-plot lower in 2015, 2016, and 2017
- FOMC median now sees only two rate hikes by end of year (Median 0.625% End-2015).
- Dot-plot median at end of 2016 now 1.875% versus 2.5% at December meeting
- Dot-plot median at end of 2017 now 3.125% versus 3.65% at December meeting
- Long-run Fed Funds median still at 3.75%, though more members see 3.5% as long-run rate
- Modest downgrade of current economic conditions, mentions export weakness
- Inflation expected to remain low over the near-term
- Inflation decline still seen as transitory- monitoring inflation developments closely
- Market reaction- S&P 500 +1.2%, 10-Yr Treasury -12.8 bps to 1.92%, USD weakens
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Tags: economy