As expected Janet Yellen's first FOMC statement showed another $10bn taper (more tightening according to Jim Bullard) but the wordy shift from quantitative thresholds to "we'll know it when we see it" qualitative guidance is relatively dovish (despite improved economic outlooks):
- FOMC SEES `SUFFICIENT UNDERLYING STRENGTH' IN ECONOMY
- FOMC SAYS IT WILL LIKELY REDUCE QE IN `FURTHER MEASURED STEPS'
- FED: LOW TARGET RATE APPROPRIATE FOR CONSIDERABLE TIME POST-QE
- MORE FED OFFICIALS SEE AT LEAST 1% FED FUNDS RATE END OF 2015
Most importantly perhaps, if expected, forward guidance is now dead, as it is a confirmed failure:
- FED DROPS 6.5% JOBLESS THRESHOLD FOR RAISING FED FUNDS RATE
While Bernanke's last meeting appeared full of disagreement; this time less so (as Plosser and Fisher appeared not to dissent). Full redline to follow.
Pre-FOMC: S&P Futs: 1873.5, Gold $1337, 10Y 2.712%, USDJPY 101.65
The hand-waving begins:
- FOMC TO WEIGH `WIDE RANGE OF INFORMATION' ON JOBS, INFLATION
As they lower growth outlook and lower unemployment outlook?!
- FED: 2014 GDP GROWTH OF 2.8%-3.0% VS 2.8%-3.2% IN DECEMBER (lower growth)
- FED: END-2014 JOBLESS RATE AT 6.1%-6.3% VS 6.3%-6.6% IN DEC. (but lower unemployment)
Full statement redline below