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17 Sep 2014
FOMC was an anti climax - ING
FXStreet (Guatemala) - Rob Carnell , analyst at ING Bank NV suggested that the latest Fed statement was something of an anti-climax.
Key Quotes:
“The Fed statement was something of an anti-climax, with no change to the pivotal “…considerable time…” section – noting how long rates may remain in their current 0-0.25% range after the end of QE”.
“That end came a little closer at this meeting, as QE was reduced to $15bn per month, down from $25bn, with only $5bn of MBS and $10bn of Treasuries to be purchased a month until the policy is brought to an end at the October 29th meeting”.
“It perhaps not so surprising that the FOMC decided to do little to change the FOMC text, despite plenty of chatter about changing the “language” of the Fed. Following the day’s earlier, surprisingly soft CPI numbers, a bigger change might have seemed incongruous – though our guess is that this was a tight decision, and making the change next month in a non-press briefing month will be harder to finesse and get right”.
“As it is, two members of the FOMC saw fit to dissent. Plosser dissented again, and for the same reasons he gave last time (he doesn’t like the time dependency of the policy and the lack of credit for progress so far), and he was joined by notable hawk, Richard Fisher”.
“Aside from this, the only remaining changes were in the economic summary at the beginning , which struck a slightly more downbeat tone than the previous minutes on growth, and was slightly less upbeat on progress towards the inflation goal”.
“There were in addition, some minor and insignificant nudges to the economic forecasts, though more members saw higher rates at the end of 2015 in the dot-diagram element (not strictly a like-for-like comparison though, with seventeen rather than sixteen assessments given thanks to the appointment of an extra Fed governor since last time”.
“Equity markets will like this decision, and as such, any rally in Treasuries is likely to be concentrated at the front end of the curve”.
Key Quotes:
“The Fed statement was something of an anti-climax, with no change to the pivotal “…considerable time…” section – noting how long rates may remain in their current 0-0.25% range after the end of QE”.
“That end came a little closer at this meeting, as QE was reduced to $15bn per month, down from $25bn, with only $5bn of MBS and $10bn of Treasuries to be purchased a month until the policy is brought to an end at the October 29th meeting”.
“It perhaps not so surprising that the FOMC decided to do little to change the FOMC text, despite plenty of chatter about changing the “language” of the Fed. Following the day’s earlier, surprisingly soft CPI numbers, a bigger change might have seemed incongruous – though our guess is that this was a tight decision, and making the change next month in a non-press briefing month will be harder to finesse and get right”.
“As it is, two members of the FOMC saw fit to dissent. Plosser dissented again, and for the same reasons he gave last time (he doesn’t like the time dependency of the policy and the lack of credit for progress so far), and he was joined by notable hawk, Richard Fisher”.
“Aside from this, the only remaining changes were in the economic summary at the beginning , which struck a slightly more downbeat tone than the previous minutes on growth, and was slightly less upbeat on progress towards the inflation goal”.
“There were in addition, some minor and insignificant nudges to the economic forecasts, though more members saw higher rates at the end of 2015 in the dot-diagram element (not strictly a like-for-like comparison though, with seventeen rather than sixteen assessments given thanks to the appointment of an extra Fed governor since last time”.
“Equity markets will like this decision, and as such, any rally in Treasuries is likely to be concentrated at the front end of the curve”.