FXStreet (Guatemala) – Rob Carnell, analyst at ING Bank noted the Fed’s statement as being little changed.
Key Quotes:
“Sure, the last week or so of marginally improved data has been acknowledged in the opening paragraph – economic activity has expanded “modestly” after slowing in the winter months, and labour market underutilization has “diminished somewhat” (“little changed” at the April statement).”
“But this and other slightly more upbeat comments on household spending and the housing sector are merely statements of fact. And there is little hint in this text that the Fed is sufficiently confident to contemplate an imminent rate hike – obviously, they did not hike rates at this meeting – a unanimous decision.”
“Economic growth projections for 2015 were revised lower to a midpoint of 1.9% thanks to the bad 1Q15 GDP out-turn (2.5% previously), future years were little changed. The median point for the unemployment rate was fractionally raised compared with March”
“PCE inflation (core and headline) was basically unchanged. In short, nothing here to get excited about.”
“So for a little more content, we have to turn to the dot diagram.. no change to the median view of 2015, though there has been some compression of the higher figures, and for 2016 and 2017, one rate hike has been taken out of the median view, with the longer run rate remaining unchanged at 3.75%.”
“This is hardly a considerable shift, and still leaves the Fed rhetoric of slow tightening and rates remaining below levels considered as “normal” in the longer term sounding a bit out of kilter with their rate forecasts.”
“In short, this really amounts to a very trivial set of statement and forecast changes, and not surprisingly, markets have not responded much to it, with the dollar slightly softer, bond yields slightly lower, and stocks slightly higher.”
“There is nothing in this statement to suggest a July rate hike”
“The Fed is data dependent now, which means we should spend more time looking at the releases, and less time listening to them.”
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