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Goldman's FOMC Post-Mortem - "More Dovish Than Expected" But Hike Coming In September

Tyler Durden's picture




 

Via Goldman Sachs' Jan Hatzius,

The March FOMC statement and projections suggested that September rather than June appears to be the most likely date for the first hike of the fed funds rate. Although the change to the "patient" forward guidance was close to expectations, the shift in the "dot plot" was most consistent with two rather than three 25 basis point hikes to the target range occurring in 2015. In addition, changes to the Committee's economic assessment were a bit more dovish.

MAIN POINTS:

1. As widely expected, the FOMC decided to drop its "patient" formulation in its forward guidance regarding the date of the first rate hike. It explicitly noted that a hike at the upcoming April meeting was unlikely, while stating that the Committee will hike "when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term."

2. Changes to the Committee's assessment of economic activity were generally dovish, with growth at a "solid pace" downgraded to growth having "moderated somewhat." In particular, "export growth weakened."

3. The median projection for the fed funds rate (or "dot") fell 50bp to 0.625% at end-2015, fell 62.5bp to 1.875% at end-2016, and fell 50bp to 3.125% at end-2017. Two participants again indicated that a hike would not be appropriate until 2016, while one indicated a target range of 25-50bp at end-2015 and seven indicated a target range of 50-75bp at end 2015 (a group that is highly likely to include the leadership of the Committee), most likely consistent with a first hike in September. The median longer run projection was unchanged at 3.75%, but many participants reduced their longer run dot by 25bp.

4. The FOMC also released a new Summary of Economic Projections. The mid-point of the central tendency of the unemployment rate fell 0.15pp to 5.1% in 2015Q4, 0.1pp to 5.0% in 2016Q4, and 0.15pp to 4.95% in 2017, implying a 0.15pp undershooting of the longer-run or “structural” rate, which declined 0.25pp to 5.1%. Real GDP growth declined 0.3pp to 2.5% in 2015, 0.25pp to 2.5% in 2016, and 0.2pp to 2.2% in 2017. Longer run growth was unchanged at 2.15%. Headline PCE inflation fell 0.6pp to 0.7% in 2015, but was little changed after that. Core inflation fell 0.3pp to 1.35% in 2015 and fell 0.15pp to 1.7% in 2016, but was unchanged at 1.9% in 2017.

5. There were no dissents.

6. Our forecast remains for a September hike, but the risks now appear slightly skewed toward a later liftoff.

 

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Wed, 03/18/2015 - 15:22 | 5903264 Almost Solvent
Almost Solvent's picture

It's like waiting for Godot. We'll raise. No really, next time maybe. Nope, next time, most likely. It's coming soon, but not yet. Fuck off and die!

Wed, 03/18/2015 - 15:23 | 5903269 Groundhog Day
Groundhog Day's picture

Goldman thinks its in September so it should happen in April

"we are just as surprised as everyone else"

Go fuck yourself LLoyd

Wed, 03/18/2015 - 15:24 | 5903280 flacon
flacon's picture

This whole world is bullshit. I head Yelled say "Job markets are improving" --> I wanted to hurl a rock at her face when she said that. 

Wed, 03/18/2015 - 15:53 | 5903406 knukles
knukles's picture

Please, right along with Liesman, SHUTTHEFUCKUPALREADYJON

Wed, 03/18/2015 - 15:25 | 5903288 Rainman
Rainman's picture

September ?? ... of what year ?

Wed, 03/18/2015 - 15:33 | 5903319 Osmium
Osmium's picture

In September they will say rates will rise in 1Q 2016, then it will Be later in 2016, then 4Q 2016....

 

You get the picture.

Wed, 03/18/2015 - 15:49 | 5903384 Sanity Bear
Sanity Bear's picture

someone should compile a list of all the reneged promises to raise rates since the GFC

Wed, 03/18/2015 - 15:29 | 5903299 Burt Gummer
Burt Gummer's picture

Fed policy is to steer the markets without actually ever acting. It's like herding cattle with promises that you won't kill them if they go a certain direction.

Markets = RIGGED and BROKEN.

https://www.youtube.com/watch?v=BatgvSN2Z7M

Wed, 03/18/2015 - 15:51 | 5903395 Metalredneck
Wed, 03/18/2015 - 16:04 | 5903431 Stoploss
Stoploss's picture

Look!!!  Superman!!!

Wed, 03/18/2015 - 15:22 | 5903265 TruthInSunshine
TruthInSunshine's picture

Anytime a Phoenix Capital article appears at the top of ZH, BUY BUY BUY!!!!!

Wed, 03/18/2015 - 15:36 | 5903332 Consuelo
Consuelo's picture

You sure it's him and not Econ-doesn't-Matters...?

 

Wed, 03/18/2015 - 15:53 | 5903409 MisterMousePotato
MisterMousePotato's picture

You're only half right. You need to add:

Anytime a Phoenix Capital article does not appear at the top of ZH, BUY BUY BUY!!!!!

Wed, 03/18/2015 - 15:22 | 5903266 ted41776
ted41776's picture

the rate hike is the last thing we'll all be thinking about in September...

Wed, 03/18/2015 - 15:25 | 5903268 buzzsaw99
buzzsaw99's picture

salacious crumb has something to say to that:

https://www.youtube.com/watch?v=EMnSpd0XRmo

evil dead has something to add:

https://www.youtube.com/watch?v=J_xJUQxE9tY

 

Wed, 03/18/2015 - 15:23 | 5903272 Bear
Bear's picture

So this time I was screwed by a 'dot plot'

Wed, 03/18/2015 - 15:24 | 5903273 maneco
maneco's picture

I thought the rate hike was going to be in June! With the end of the Shemitah Year coming up in September 2015 Goldman will have to forget about any rate hike for the foreseeable future.

Wed, 03/18/2015 - 15:24 | 5903278 Bell's 2 hearted
Bell's 2 hearted's picture

"Ms Yellen, what are your thoughts on the Atlanta Federal Reserve Bank's real time GDP model collapsing?"

Wed, 03/18/2015 - 15:24 | 5903281 casey13
casey13's picture

Bullishit

Wed, 03/18/2015 - 15:25 | 5903284 Icelandicsaga.....
Icelandicsaga...............................................'s picture

September.. when shemitah hits the fan

Wed, 03/18/2015 - 15:25 | 5903286 101 years and c...
101 years and counting's picture

next time, can GS give us the pre-mortom FOMC statement?  you know....since they do write it out and just email it to the fat cow anyways......

Wed, 03/18/2015 - 15:26 | 5903290 orangegeek
orangegeek's picture

back in October, rate hike in March, then more recently in June and now GS says Sept.

 

why?  because the Fed doesn't control rates - the Fed influences rates through bond buying and rates won't go up because of Europe's NIRP.

 

Why would the US gubbamint want to pay higher rates on their debt??

 

And in conclusion, fuck off and die yellen and eat shit and die GS.

Wed, 03/18/2015 - 15:28 | 5903296 GoldenDonuts
GoldenDonuts's picture

hahahahahahahahaha  GS thinks that the fed will hike rates in september.  You know September its the official month of shit hitting the fan

Wed, 03/18/2015 - 15:31 | 5903307 ebworthen
ebworthen's picture

No rate hike in 2015.

The only real forecast is perpetual jawboning as the banksters of the world rob the public and public treasuries blind with the aid and abetment of central banks.

Wed, 03/18/2015 - 15:32 | 5903317 maneco
maneco's picture

Surely you mean Public Debteries and not Treasuries!

Wed, 03/18/2015 - 15:34 | 5903322 Consuelo
Consuelo's picture

No one could have seen it coming...

 

 

Wed, 03/18/2015 - 15:34 | 5903324 ejmoosa
ejmoosa's picture

The Fed does not understand what comes first.  They are now dropping future expectations for the economy yet expect that employment will continue rising and point to rising employment as their indicator that things are getting better.

Employment is a lagging indicator, not a leading indicator.  And it lags by four to five quaters.  We will be in the recession before they even know what has hit them.

 

View their forecasts for yourself.  And remember that they have been on the high and optimistic side since the beginning.

 

http://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20150318.pdf

Wed, 03/18/2015 - 15:38 | 5903339 maneco
maneco's picture

You forget that it is employment statistics published by the government that are rising and improving while in the real world employment is getting worse.

Wed, 03/18/2015 - 15:49 | 5903386 ejmoosa
ejmoosa's picture

I have not forgotten that.  I know how half-baked their data is.  Yellen stated we may not even see a rise in wages.  That tells us everything.

Wed, 03/18/2015 - 15:51 | 5903393 maneco
maneco's picture

She makes it up as she goes along. Pure propaganda.

Wed, 03/18/2015 - 15:37 | 5903338 thismarketisrigged
thismarketisrigged's picture

i hope come september, goldman sachs is non exsistent, these bastards need to be taken care of once and for all.

 

die goldman sachs, u fucking scumbags. lloyd and all his cronies must be taken care of once and for all

Wed, 03/18/2015 - 15:40 | 5903351 maneco
maneco's picture

Unfortunately the FDIC will now be insuring OTC Derivatives of banks like Goldman so they will probably be saved again thanks to the lawmakerrs in D.C.

Wed, 03/18/2015 - 15:51 | 5903392 Mike Honcho
Mike Honcho's picture

That legislation has to be for some kind of bankruptcy or liability coverage.  $290T or any trills for that matter cannot be literally paid to cover losses.  Even if it could be so, if that isnt the straw that breaks the citizens back then I am off to the Bahamas.

Wed, 03/18/2015 - 15:45 | 5903340 medium giraffe
medium giraffe's picture

So where the fuck do you find the extra GDP to service debt if you raise rates?

Do we get OperationTwist x 10Fuck You ?

I'm sure all of this would make sense if I had a D.Phil.

Wed, 03/18/2015 - 15:48 | 5903381 venturen
venturen's picture

The collaspe is on for Oct!

Wed, 03/18/2015 - 15:48 | 5903382 starman
starman's picture

Who's Hike? German soccer player? 

Wed, 03/18/2015 - 15:52 | 5903401 Bay of Pigs
Bay of Pigs's picture

ZH should can this fuckan bullshit from the worthless cocksuckers at Goldman Sachs.

Wed, 03/18/2015 - 16:17 | 5903535 Spungo
Spungo's picture

Since the dollar is strengthening, wouldn't it make more sense to go NIRP?

Wed, 03/18/2015 - 16:26 | 5903589 TheRideNeverEnds
TheRideNeverEnds's picture

I made a post the other day explaining how statistically it was about 100% guarnteed we would go sharply higher of the announcement so any idiot should have know what today would bring but that is using the numbers.

 

That said; no way goldman knew this was coming, their public recommendation yesterday to sell the market combined with their prop traders in the S&P pit buying futs with both hands all day shows that they were confused.

Wed, 03/18/2015 - 17:36 | 5903870 gmak
gmak's picture

No. It shows that they wanted to buy prop and take  more money from the muppets.

 

Have you met Goldmann Sachs? LoL.

Wed, 03/18/2015 - 16:31 | 5903621 RaceToTheBottom
RaceToTheBottom's picture

Never hike, never.

They cannot hike.

Wed, 03/18/2015 - 17:00 | 5903639 Chuck Knoblauch
Chuck Knoblauch's picture

IT'S A MADHOUSE!

https://www.youtube.com/watch?v=VFCM6TZgTMI

The commie Apes win.

From my cold dead hands!

DC is AC (Ape City).

Wed, 03/18/2015 - 16:44 | 5903666 Colonel Klink
Colonel Klink's picture

Bullshit, they've been saying there's a hike coming for 7 years.  Lying fuckers need to be tried and hung for crimes against the citizenry.

Wed, 03/18/2015 - 17:34 | 5903868 gmak
gmak's picture

March.... NO - June.... NO - September. Anyone else feel like this is a wallet on a string that's always being pulled out of reach.  The FED will NEVER hike rates. they can't. The only way rates go up is when the market says enough! and asks to be paid in keeping with the level of risk.

Wed, 03/18/2015 - 19:13 | 5904161 lakecity55
lakecity55's picture

Blowbama would have to borrow even more $$$ if there is a hike.

Wed, 03/18/2015 - 17:35 | 5903869 cowdogg
cowdogg's picture

They can never raise rates. We have passed Peak Jew.

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