Instant Analysis of Today’s March FOMC Statement

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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