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Hilsenrath's 712 Words-In-4-Minutes Keeps 'Fed Still Dovish As Ever' Dream Alive

Tyler Durden's picture




 

In case you misunderstood and judged the market's reaction to Janet Yellen's first FOMC statement, the ultimate Fed mouthpiece is out with a few clarifying words (well 712 words posted in under 4 minutes). The Wall Street Journal's Jon Hilsenrath clarifies "The Fed stressed it has not changed its plan to keep interest rates low long after the bond-buying program ends," and added further that "the Fed said explicitly for the first time that it likely would keep short-term rates lower than normal, even after inflation and employment return to their longer-run trends." While noting a bigger consensus of members around a 2015 rate 'liftoff', Hilsenrath is careful to point out that the Fed also blamed the weather for not having a clue.

 

Via WSJ,

The Federal Reserve on Wednesday altered its guidance on the likely path of interest rates, putting less weight on the unemployment rate as a signpost for when rate increases will start, while affirming its plan to keep borrowing costs low far into the future.

 

Since late 2012, the Fed had said it wouldn't consider raising interest rates from near zero until the jobless rate fell to 6.5%, provided inflation looks likely to remain below 2.5%. In a new policy statement released Wednesday, the Fed dropped the reference to the 6.5% jobless rate, which officials have come to see as too limited an indicator of the labor market's health.

 

Instead, the central bank said it would "assess progress…toward its objectives of maximum employment and 2 percent inflation" in deciding when to raise rates from near zero, where they've been since late 2008. In judging that progress, the Fed will "take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments," the statement said.

 

Moreover, the Fed said explicitly for the first time that it likely would keep short-term rates lower than normal, even after inflation and employment return to their longer-run trends. Its latest projections, also released Wednesday, showed officials coalescing around a 2015 liftoff for interest rates.

 

Ten of 16 Fed officials said they saw the Fed's benchmark interest rate rising to 1% or more by the end of 2015, a slight uptick in projections from December, when only seven officials saw rates at or above the 1% level. Twelve of 16 officials expected the rate to be at or above 2% by the end of 2016. In December, eight officials saw rates at or above 2% by the end of 2016.

 

Fed Chairwoman Janet Yellen will likely elaborate on the rate guidance changes at her first press conference as Fed chief, scheduled to begin at 2:30 p.m. Eastern time.

 

As expected, the Fed also said it would reduce its monthly bond purchases by another $10 billion per month in April, to $55 billion from $65 billion in February and March. The Fed said it would reduce its purchases of long-term Treasury bonds to $30 billion-per-month and cut its purchases of mortgage-backed securities to $25 billion-per-month, a reduction of $5 billion for each. The bond-buying program seeks to push down long-term borrowing rates to spur investing, spending and hiring.

 

The Fed has been moving toward the change in language about interest rate policy for a few months as the jobless rate fell closer to the 6.5% threshold. The rate was 6.6% in January and 6.7% in February, but Fed officials say they see other reasons to keep rates low, including other signs of slack in the economy and headwinds that are still holding the economy back.

 

The Fed stressed it has not changed its plan to keep interest rates low long after the bond-buying program ends. Officials continue to believe it is likely they will keep rates near zero "for a considerable time after the asset purchase program ends," especially if inflation continues to run below the Fed's 2% target, the statement said.

 

Officials explicitly acknowledged that they changed their rate guidance because the unemployment rate had gotten close to the 6.5% threshold. "The change in the Committee's guidance does not indicate any change in the Committee's policy intentions as set forth in its recent statements," officials said.

 

In their statement, Fed officials acknowledged the recent string of soft economic data, saying that "economic activity slowed during the winter months, in part reflecting adverse weather conditions."

 

Eight of the nine voting members of the policy-making committee supported the changes to the rate guidance and bond-buying program. Minneapolis Fed President Narayana Kocherlakota dissented, objecting to removal of the quantitative unemployment and inflation thresholds from the Fed's guidance on interest rates.

 

Normally, all seven Fed governors vote at every policy meeting, as does the president of the Federal Reserve Bank of New York. But the Fed board of governors currently has three vacancies.

 

The presidents of the 12 regional Fed banks vote on a rotating basis. This year, Cleveland Fed President Sandra Pianalto, Dallas Fed President Richard Fisher, Philadelphia Fed President Charles Plosser and Mr. Kocherlakota of Minneapolis vote.

 

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Wed, 03/19/2014 - 14:39 | 4568786 Charles Nelson ...
Charles Nelson Reilly's picture

what a fuckin douchebag

Wed, 03/19/2014 - 14:54 | 4568876 Ham-bone
Ham-bone's picture

only fucking question I have...with Fed tapering (assuming to zero), who will buy all the $12 T + public debt and at what rates???

Only 3 categories ; Domestic, Fed, and Foreigners

Fed sez they are tapering to zero

Domestics have added a net zero since '00...these are states, pensions, insurers, etc. who cannot afford to buy bonds yielding 2.5% for 10yrs and meet their 8% assumptions

So, it's all up to "foreigners" to maintain their $5.5 T in notes/bonds and speed up their purchases despite smaller US trade and budget deficits....anybody else see a problem with this story???

Wed, 03/19/2014 - 14:56 | 4568889 kliguy38
kliguy38's picture

Who da Foch could listen to these psycopaths and not fall over laughing...........Yellen????????????? REALLY??????hehehehehee

Wed, 03/19/2014 - 14:57 | 4568897 holmes
holmes's picture

What! We can't count on Putin?

Wed, 03/19/2014 - 15:14 | 4568947 Ham-bone
Ham-bone's picture

In an entirely interest rate sensitive economy...who buys the debt and at what rate determines everything...

 

Jan '00 -      '07 -          Dec '13

$1 T  --->  $1.6 T ---> $5.6 T (cumulative "foreign" held US Treasury debt)

25% --->     40% --->    55%  (% of notes / bonds held by "foreigners")

1%  --->      1%  --->     25%  (% Fed held notes / bonds...Fed primarily held Bills until '08)

74% --->     59% --->    20%  (% domestically held notes / bonds)

180% --->   130% --->  247% (% public vs. intra-gov debt)

350% increase                         (public outstanding debt, $3.5 T to $12.4 T)

250% increase                         (intra-gov debt, $2 T to $5 T)

6.6% --->    5%    --->   2.4% (net interest rate on debt)

$300B ->  $270B ---> $223B (net interest paid on national debt)

$9.2 T --> $13.7 T --> $16.1 T (GDP = 75% increase);

$5.7 T -->  $9 T     --> $17.4 T (National debt = 305% increase )

AND what the fuck are we looking at below where Core EU barely buy but banking EU can't get enough Treasury's...WTF???

EUROPE

Russia <$5 B --->  $9 B   ---> $139 B

Norway  <$5 B ---> $20 B  ---> $97 B

UK    $50 B  --->  $100 B ---> $164 B

Switzerland $18 B> $34 B  ---> $175 B

Turkey <$5 B  ---> $25 B  ---> $52 B

TOTAL    $83 B                       $627 B  (750% increase)

BANKING EURO

Ireland $5 B --->  $19 B  ---> $125 B

Belgium $28 B -->  $13 B  ---> $310 B

Luxemburg <$5 B-> $60 B --> $134 B

TOTAL    $38 B                         $516 B  (1350% increase)

CORE EURO

Germany $54 B ---> $50 B ---> $67 B

Italy      $20 B   ---> $14 B ---> $30 B

Netherland $13 B-> $15 B ---> $37 B

France   $27 B  ---> $10 B ---> $54 B

Spain    $20 B   ---> $<5 B ---> $23 B

TOTAL   $134 B                   $211 B  (57% increase)

Wed, 03/19/2014 - 15:02 | 4568922 eclectic syncretist
eclectic syncretist's picture

My reply to Hilsenrath? "Taper-on bitchez"!

Wed, 03/19/2014 - 14:39 | 4568789 Troll Magnet
Troll Magnet's picture

Jews are so under-represented in our society.

Wed, 03/19/2014 - 14:40 | 4568790 Racer
Racer's picture

waffle with bullsh!t followed by more waffle with bullsh!t

Wed, 03/19/2014 - 14:43 | 4568808 SgtShaftoe
SgtShaftoe's picture

Why doesn't this shithead jump off a building or suicide himself with a dremel tool?

Wed, 03/19/2014 - 14:46 | 4568825 NYPoke
NYPoke's picture

Wow.  Fed douchbaggery & all I want to know is where to get the mouthpiece in the picture.  Sports Authority does not carry them.  None of the stores do around here.

 

The Whigs/Patriots, the 2nd Central Bank & the Civil War...all replaying now, and all I want is the mouthpiece.  I am so shallow.

 

Wed, 03/19/2014 - 14:46 | 4568830 butchee
butchee's picture

Evelyn Wood's speed typing, bitches!

Wed, 03/19/2014 - 14:52 | 4568864 Chuck Knoblauch
Chuck Knoblauch's picture

Red, blue, or green? What's your favorite color?

Wed, 03/19/2014 - 14:55 | 4568880 TheMeatTrapper
TheMeatTrapper's picture

Since the bond buying program can never end, does that mean interest rates can never be allowed to rise?

Wed, 03/19/2014 - 14:55 | 4568887 holmes
holmes's picture

My ears hurt from listening to this old cow. Nobody talks like that.  It's just a bunch of weasel words just like the two useful idiots who preceded her.

Wed, 03/19/2014 - 15:07 | 4568952 Chuck Knoblauch
Chuck Knoblauch's picture

35 years of Zionist rule at the FED.

Wed, 03/19/2014 - 16:02 | 4569254 tempo
tempo's picture

Under the Constitution, Congress regulates money. Never mentions FED. interesting

Wed, 03/19/2014 - 14:56 | 4568893 Ban KKiller
Ban KKiller's picture

Chinese pigs commit suicide over Yellen remarks. Jump in river and drown themselves. 

http://www.reuters.com/article/2014/03/19/china-pigs-pollution-idUSL3N0M...

 

Bullish...or, er, Piggish!

Wed, 03/19/2014 - 14:59 | 4568902 kellycriterion
kellycriterion's picture

The OPM mafias take what they want AS NEEDED. Ya know to keep their operations and those of their kickbackiest friends fully funded.

The peons can play with whatever they aren't using. At present that is. Just don't get too comfortable if you aren't politically connected or have a really sexy talent or skill.

Wed, 03/19/2014 - 15:01 | 4568917 Lin S
Lin S's picture

WTF is that black thing in the picture?  What's that for?  Seriously.

Wed, 03/19/2014 - 15:11 | 4568975 dexter_morgan
dexter_morgan's picture

Looks like something out of that new 'Nymphomaniac' film or sumthin

Wed, 03/19/2014 - 16:04 | 4569261 Legolas
Legolas's picture

Mouthguard?  But what would the hole be for?

ROFLMAO!!!

Wed, 03/19/2014 - 15:01 | 4568919 The Econ Ideal
The Econ Ideal's picture

ZIRP forever with a steepening of the yield curve so the banks can make some spread to add to their ZIRP rake. 

Wed, 03/19/2014 - 15:02 | 4568925 thetruthseeker
thetruthseeker's picture

I just don't understand how these sycophantic hacks like Hilsenrath can live with themselves by going along with and supporting the global banking cartel.  Are these people so emasculated and self-loathing that they have to continually suck up and fellate the banking industry and politicians?  It certainly seems so.  Either way, there will be a special level of Hell reserved for people like Hilsey and Steve LIESman, among many, many others.

Wed, 03/19/2014 - 15:13 | 4568981 NOTaREALmerican
NOTaREALmerican's picture

I just looked in the mirror.   The guy said he'd do it in a heartbeat.   He said the Elysium Class lives very well and that you know you are an adult when you can live a happy duplicitous life.

He wanted to know where to sign up tho (he's kind-of a semi-austistic child that way, he thinks there's a sign-up sheet.... sad).

Wed, 03/19/2014 - 15:28 | 4569060 Duke Dog
Duke Dog's picture

If you truly want to know the answer to your question as the "thetruthseekers", spend five minutes on "startpage" and educate yourself on psychopaths.

Wed, 03/19/2014 - 15:03 | 4568930 alangreedspank
alangreedspank's picture

As long as they keep rates that low, they will not get the (official) inflation they are looking for. Japan is an example.

Wed, 03/19/2014 - 16:22 | 4569329 NihilistZero
NihilistZero's picture

"the Fed said explicitly for the first time that it likely would keep short-term rates lower than normal, even after inflation and employment return to their longer-run trends."

Low rates don't matter.  3% is way lower than "normal".  Only ZIRP can keep the ponzi levitated.  If the FED and their mouth piece are admnitting ZIRP and QE are over, then say good buy to Housing Bubble 2.0 and the Bull Market.  But hey, they saved the Big 4 banks from nastionalization right?

The FED knows we can't have a recovery without increased cosumer spending and the only way you can get that is through lower housing costs.  Only way you can save commercial RE paper and fill the malls is with a lower housing and debt burden on the consumer.  A student loan jubilee will be one of  Dear Leader's final acts in office to further facilitate this.  The banks will consider it a gift to his legacy for serving them so well.

Wed, 03/19/2014 - 15:04 | 4568932 buzzsaw99
buzzsaw99's picture

there will be moar. the fed drinks your milkshake. that is all.

Wed, 03/19/2014 - 15:14 | 4568985 dexter_morgan
dexter_morgan's picture

all I heard was blah blah blah moar moar moar blah blah blah

Wed, 03/19/2014 - 15:18 | 4569008 youngman
youngman's picture

This just means the TBTF banks can keep on borrowing money from the Fed for nothing..and lend it out to the sheeple at a high rate with their new inflation...easy money for a big bank....I wish I could borrow a few billion at zero percent interest rates

Wed, 03/19/2014 - 15:19 | 4569015 GooseShtepping Moron
GooseShtepping Moron's picture

All things considered, this was a good first step for Mrs. Yellen-Akerlof. She maintained the credibility of the Fed but, more importantly, she subtly signaled the pathetically lame-duck status of Barack Obama and the Congress of Idiots. By dropping the unemployment rate from the tightening criteria she is saying either that she doesn't believe the official numbers or that she doesn't think the number matters. In either case it is once again the Fed who will have to make up for what Congress neglects to do, i.e. address the structural problems underlying the economy.

The fact that she is willing to make it tougher for the very Administration who appointed her to hide their ineptitude in her very first FOMC statement is encouraging. It shows she is aware of her authority and her responsibility to exercise it properly, and that is a rare quality in public life these days.

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