Fed Expects Rates To Stay Low Through Late 2014

Fed Leaves Rates Unchanged; Expects Rates To Stay Low

As expected, Ben Bernanke and the FOMC left rates unchanged at 0.0% - 0.25% at today’s FOMC meeting. However, given that no action was anticipated, the key to today’s meeting summary was once again the contents and the various changes of the statement and what Mr. Bernanke will have to say at his press conference.

The bottom line on rates is the FOMC continues to expect rates to remain exceptionally low at least thru late 2014. So let’s now move on to the changes since last statement:

In the April statement the FOMC said that Inflation has picked up somewhat, mainly reflecting higher prices of crude oil and gasoline. However, longer-term inflation expectations have remained stable.

Compare this to what was said in March: Inflation has been subdued in recent months, although prices of crude oil and gasoline have increased lately. Longer-term inflation expectations have remained stable. So, not any real changes there.

On the topic of housing the FOMC says that despite some signs of improvement, the housing sector remains depressed. In March, the Fed said simply that the housing sector remains depressed. Thus, we can assume that the Fed sees some very minor signs of improvement in housing.

Looking at the economy, the Committee expects economic growth to remain moderate over coming quarters and then to pick up gradually. Consequently, the Committee anticipates that the unemployment rate will decline gradually toward levels that it judges to be consistent with its dual mandate.

In March, the statement read: The Committee expects moderate economic growth over coming quarters and consequently anticipates that the unemployment rate will decline gradually toward levels that the Committee judges to be consistent with its dual mandate. As you can see, no real change there.

Elsewhere it is worth noting that the statement did not acknowledge any of the recent economic data points and nothing was mentioned regarding extending Operation Twist. Recall that it was expectations for an extension of Operation Twist that was cited for part of Tuesday’s stock market turnaround.

Finally, the vote was 9-1, with Lacker again the only dissenter amongst the committee.

Other stories on the economy to review:

• Durable Goods Puts Economic Recovery in Question
  
• UK Slips into Recession
  
• New Home Sales Fall in March
  
• Consumer Confidence Dips in April

Looking for a technically based system to guide your market moves? Download our Special Report on the New "Adaptive" Daily Decision System

  S&P 500 - Intraday

 

 

Remember, you are in control your email alerts! You can receive alerts for more than 25 free research report alerts including: The “10.0” Report, The Insiders Report, ETF Leaders Report, and