Fed Watch: 'Relatively soon,' teases Fed

07-26-2017

As expected, the Federal Reserve left the overnight fed funds rate in a range of 1-1.25% at the conclusion of its 2-day meeting this afternoon. With no press conference and no update to its Statement of Economic Projections (which includes the so-called "dot plot"), investors were left to parse any changes in the wording of the statement compared to that of the June Federal Open Market Committee meeting for hints of policy moves. In addition to upgrading its commentary on labor market strength and mildly downgrading the inflation outlook, the Fed stated its balance sheet drawdown would begin “relatively soon,” suggesting that tapering Treasury and mortgage-backed security purchases could commence as soon as September. Reaction in the bond and stock markets was muted.