FedWatch: FOMC statement meets expectations
If the Fed’s goal was to avoid creating any significant volatility with today’s Federal Open Market Committee statement, it succeeded. The statement largely met expectations regarding the continued tapering of the Fed’s bond-purchase program by $10 billion, to $45 billion a month. In addition, the FOMC made no change to the largely qualitative forward guidance language inserted at the prior FOMC meeting and reasserted the need for the current “highly accommodative stance of monetary policy.”
In fact, very few words changed in this statement relative to last meeting. The small section that did offered a somewhat more constructive view of the domestic economy, particularly with respect to consumer activity and continued modest improvement in labor markets. These positives were somewhat dampened by FOMC acknowledgement of the recent decline in business investment activity. The policymakers also repeated their view that the harsh winter depressed economic activity. On the heels of the market moving release this morning of the barely positive Q1 GDP (up just 0.1%), the Fed’s outlook seemed to be bit more hopeful.
So, for a meeting after which there was no press conference and no dot chart, the sole communication was a little-changed FOMC statement that was not a market mover. After the volatility that surrounded recent FOMC meetings, that’s probably exactly the way the Fed wanted it.