FYI: As we expected, the FOMC dropped the word “patient” from their statement. Also, of importance, they reduced their expectations for GDP growth and inflation in the next two years. Perhaps most importantly to many, the so-called “dot plot” featured big changes. The Fed reduced their expectations for interest rates. 2015 is down to 0.625% from 1.125% while 2016 is down to 1.875% from 2.50%. The new, “important” passage in the Fed statement reads like this:
The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.
What’s important about this part of the statement is that it clearly says the FOMC is looking for “further” improvement, meaning the economy and labor market has not yet met whatever criteria necessary to warrant a rate hike. We remain of the belief the Fed will first raise rates in September and view this statement, and the projection changes, and reducing the odds of a June hike.
Regards,
Ted
http://dailyalts.com/janet-yellens-policy-of-cheap-money/
