Fed: Forward guidance on tapering and rates unchanged – Wells Fargo

The Federal Reserve, as expected, kept monetary policy unchanged after its two-day meeting. According to analysts at Wells Fargo, the FOMC statement and opening remarks from Chair Jerome Powell's press conference struck a slightly more optimistic tone but did nothing to dissuade expectations that the current stance of policy will remain unchanged for months to come. 

Key Quotes: 

“The April FOMC meeting statement and opening remarks from Chair Powell's press conference struck a slightly more optimistic tone but did nothing to dissuade expectations that the current stance of policy will remain unchanged for months to come.”

“We are gradually getting closer to an eventual taper, but we suspect it will be at least a few more months before that word reenters the FOMC's vocabulary.

“Despite the upgraded read on the economic growth and inflation, forward guidance about future policy adjustments was left unchanged.”

“While no doubt encouraged by the pace of the recovery over the past six weeks, the Fed remains more focused on its level. With 8.4 million fewer jobs since the pandemic began, and an uncertain inflation outlook past the near-term pickup, there remains a good deal of ground to cover before reaching maximum employment and inflation that averages 2%.”

“With risks to the outlook remaining, the meeting statement again indicated that the FOMC will need to see outcomes consistent with its goals, not just forecasts. That will keep the Fed in a holding pattern for months to come.”