Analysts at Nomura explain that as expected, the FOMC raised the federal funds target range from 0.50-0.75% to 0.75-1.00% and in the press conference, Chair Yellen indicated that the economy has made solid progress toward the goals of maximum employment and 2% longer-run inflation target but she also said that the economy evolved as the FOMC had expected and their outlook hasn’t materially changed during the inter-meeting period.
“Consistent with her remarks, the median of the participants’ policy rate projections (the “dots”) for 2017 and 2018 did not change from the projections in December meeting. It is important to note that there was no change to the median of the FOMC’s longer-run policy rate forecasts, implying that the participant’s estimates of neutral rate did not change materially. Yet, there were some upward shifts in the lower tail of the distribution. The 25th percentile of the distribution of 2017 and 2018 moved up slightly. Considering improvement in financial conditions and upside risks to growth, it is not surprising that the lower tail of the distribution shifted slightly toward the current medians. Only 2019 median changed, which moved up to 3% from 2.875%.”
“Consistent with Chair Yellen’s message that the economy is in line with the FOMC’s forecasts, its other economic forecasts did not change much. As expected, median core PCE inflation for 2017 increased to 1.9% from 1.8%, reflecting the recent firming of core goods prices.”
“The bottom line of message is that this decision does not reflect a “reassessment” of the economic outlook or the appropriate course for monetary policy. As the economy evolves in line with the FOMC’s expectations, it is likely that target policy rates will go up in line with the FOMC’s forecast. As such, we do not expect any acceleration in the pace of hikes as long as economic developments remain on track. As a result, we maintain our monetary policy outlook, expecting two more hikes this year and two more next year.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.