Fed reaffirms highly accommodative stance

Bullet Points I thought Important

·        growth in economic activity has picked up recently
·        slowed sharply during the winter in part because of adverse weather conditions
·        Household spending appears to be rising more quickly.
·        The Federal Opern Market Committee currently judges that there is sufficient underlying strength in the broader economy to support ongoing improvement in labor market conditions.
·        To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy remains appropriate.
·        The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.
Comment: The Fed has indicated that the accommodative policy is appropriate for today and that it may, for consideration of ‘economic conditions’ be appropriate even after ‘near mandate-consistent levels’ of employment and inflation are reached.  It is important to recognize that economic conditions are expected to dominate the decision on lift-off and pace of accommodation removal and not pre-ordained policy prescription.
The recognition of stronger household spending and pick-up in economic growth are not surprising.  

There are no real surprises here.

About the Author

Martin McGuire, managing director at TJM Institutional Services

Comments
comments powered by Disqus
Check out Futures Magazine - Polls on LockerDome on LockerDome