Goldman's FOMC Statement Post-Mortem

Tyler Durden's picture

From Jan Hatzius, who needs to coach Yellen much better next time around. Incidentally, this is Goldman's take on the statement and not on Yellen's disastrous press conference. 

From Goldman Sachs

BOTTOM LINE: The March Summary of Economic Projections (SEP) indicated a more hawkish path of the policy rate than that seen in the December SEP. The statement included a move toward qualitative guidance, but was roughly neutral on net in our view.


1. The median participant’s forecast for the funds rate (the “dots”) remained at 0.13% at end-2014, but rose 25bp to 1.0% at end-2015 and rose 50bp to 2.25% at end-2016. The median projection for the longer-run rate remained 4.0%. Only two participants expected that the first hike would come in 2016, down from three in December.

2. The Committee adopted qualitative forward guidance by stating that it currently anticipates the fed funds rate to remain in the current 0 to 25 basis point range "for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored." Looking further ahead, the statement indicated that "even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run." In addition, the statement said that "the change in guidance does not indicate any change in the Committee's policy intentions as set forth in recent statements." We see this set of outcomes on the forward guidance as relatively neutral.

3. The assessment of economic conditions noted slower activity in recent months, but partly blamed the weakness on "adverse weather conditions." The assessment of household spending and business fixed investment was changed from "has advanced more quickly" to "continued to advance." The description of inflation and inflation expectations was unchanged.

4. As overwhelmingly expected, the Committee continued to taper the pace of its asset purchases by $10bn to $55bn/month, beginning in April. An accompanying statement on the New York Fed website indicated no other changes to operating parameters.

5. Minneapolis Fed President Kocherlakota lodged a dovish dissent, noting that the Committee did not express its commitment to return inflation to the 2 percent target strongly enough.

6. With regard to participants’ economic projections, the mid-point of the central tendency of the unemployment rate was lowered by 0.25pp to 6.2% in 2014Q4, by 0.2pp to 5.75% in 2015Q4, and by 0.15pp to 5.4% in 2016Q4. In addition, the longer-run or “structural” unemployment rate was lowered 0.1pp to 5.4%. Real GDP growth was lowered to 2.9% in 2014, 3.1% in 2015, 2.75% in 2016, and 2.25% in the longer run. Changes to core and headline PCE inflation projections were minor. The core PCE inflation projection remained at 1.5% at end-2014, rose a touch to 1.85% at end-2015, and remained at 1.9% at end-2016.

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jcaz's picture

LOL- "Roughly neutral on net"= we're as surprised as you are....

101 years and counting's picture

GS' post mortem.  "we got the dumbest person we could find to run the fed.  hey america, fuck you"


LawsofPhysics's picture

There you go.  All by design folks.

Hedge accordingly.

Deacon Frost's picture

My rhetorical question LoP, is I guess, if the ‘Fed’ is reducing bond purchases another 10B a month, how is it they are keeping interest rates so low?

Al Huxley's picture

Because all the fiscal responsibility by the esteemed representatives of the people in DC has resulted in a reduced deficit, so less monetization is required now to hide the insolvency.  Plus, the Belgians are totally hot for Treasuries now, so we got that going for us.

Al Huxley's picture

BOTTOM LINE:  Mrs Debtfire's a clueless twat who hasn't yet realized that her job is to pump the stock market AND keep a safe bid under bonds.  But that works for us because we feed her the script and then front run it anyway.

dcohen's picture

Got to love how all economists sit there and pretend there is something to analyse, all of them know it is bogus, yet they all sit there, staring at each other, all aware, that they are bullshitting day in and day out. No wonder they jump from buildings those pathetic Ffaces.

elwind45's picture

Economist don't jump from buildings! It is not that important to be wrong?

godog212's picture

Major Information or dis-information campaign gonna on YouTube

Do this search "The Economic Collapse & Market Crash 2014 2015"

Dummy accounts are being set up and loaded with 100's of collapse/consiparcy/goldsilver videos

and such all uploaded within 24 hours


George Best

George Gunner

Edin Dzeko




elwind45's picture

Belgians did everyone go to the waffle house? If it were the Swiss now "I would buy that for a dollar"? Why hate Belgium when the Swiss created the opportunity? Or Russia is European most days?

elwind45's picture

Note to shareholders: doing gods work may take more then a rib to create this masterpiece