Unanimous Fed Holds Rates As Expected; Does Not Hint At Imminent March Rate Hike

Tyler Durden's picture

With gold gaining, dollar declining, a flattening yield curve, and a market not buying The Fed's 3-hikes plan, Janet and her band of merry-men (and women) had to do something to get investors' confidence back to signal 'March is live', as Trumponomics dominates the conversation, but it appears they failed.

  • FED SAYS CONSUMER, BUSINESS SENTIMENT HAVE IMPROVED OF LATE
  • FED REPEATS NEAR-TERM RISKS TO OUTLOOK `ROUGHLY BALANCED'
  • FED SAYS MARKET-BASED INFLATION GAUGES `REMAIN LOW'

It may have failed, however, because the biggest highlight of the February statement (link) appears to be the line that "Market-based measures of inflation compensation remain low", which has been revised from the December version to remove the "measures have moved up considerably" language in what may be a dovish revision, and as such it appears the Fed is converging with the market's view of just 2 rate hikes in 2017.

On the other hand, the Fed changed its "inflation is expect to rise" to "inflation will rise to 2 percent over the medium term", which appears to be a hawkish counterpoint.

The Fed also added this entirely new language: "Measures of consumer and business sentiment have improved of late", suggesting the Fed is just as focused on "soft" data as it is on actual "hard" data.

Also, as noted above, and as expected, the Fed added that "Near-term risks to the economic outlook appear roughly balanced."

But overall, the Fed left little guidance as to when it may hike rates next, and certainly did not presage a March hike as imminent based on today's language.

While most investors are confused by it, there was no mention of the uncertainty around fiscal policy, which drew lots of questions at Yellen's December press conference and will certainly be the focus during Yellen's congressional testimony in two weeks.

Finally, the Fed did not provide any guidance whether it would normalize the balance sheet, and instead kept the language constant from last month saying:

The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way.

For the full summary, scroll to the bottom for the redline comparison.

*  *  *

As a reminder, Bloomberg offers this Fed Spectrometer...

 

Since The Fed hiked rates, the yield curve has flattened dramatically...

The dollar is down...

 

And gold is the best performer by far...

 

And the market remains unconvinced at the 3-hike plan...

So a flatter curve and soaring gold? "Policy error" anyone?

Additional headlines:

  • *FED SAYS JOB GAINS REMAINED SOLID, UNEMPLOYMENT STAYED LOW
  • *FED: INFLATION INCREASED IN RECENT QUARTERS, STILL UNDER 2%
  • *FED REPEATS BUSINESS INVESTMENT HAS REMAINED SOFT

While the Fed remains far from a nomralized rate, and balance sheet, environment, the number of words in its statements is clearly declining:

Full Redline below:

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SallySnyd's picture

Here is an article that looks at who the Federal Reserve blamed for the post-Great Recession unemployment problem:

 

http://viableopposition.blogspot.ca/2017/02/the-federal-reserve-blaming-unemployed.html

 

It’s interesting to note that they placed no blame on themselves and their less than successful monetary policies.

molecool's picture

As i've said for years now - no rate hike in this decade.

NotApplicable's picture

Well, at least not until it's time to blow everything to pieces.

I have been wondering if Yellen would continue to pull a "Sheriff Bart from Blazing Saddles" (holding the gun to her head, threatening to shoot if Trump didn't follow her lead).

mtl4's picture

FED is playing chicken with the stock market right now because if the Euro crashes and bonds take a dump all that money will be rushing right for US markets and they won't be able to raise rates fast enough to hold it off until it's too late (far higher than it is right now).

Jim Sampson's picture

You just know they'll fuck it up...  they're steeped in it.

booboo's picture

You would be wrong since December was in this decade

Majestic12's picture

What happened to "FIRE YELLEN"?

More apologist drivel.

The NWO tells all Presidents, governments, corporations and militaries what to do.

True Patriots favor guillotines for them all!

King Tut's picture
King Tut (not verified) SallySnyd Feb 1, 2017 2:15 PM

 "The Jew cries out in pain as he strikes you"- old Pollack proverb

JRobby's picture

They are preparing their resumes 

A community college in rural VA has apprached Yellen with an offer.

FreeShitter's picture

Rate hike? You plebes got your quarter already. Usury forever bitches.

molecool's picture

As i've said for years now - no rate hike in this decade.

Seasmoke's picture

Well you have been wrong twice so far. Albeit very small.

Soul Glow's picture

Oh but they were going to bring the Trump rally to its knees because the Fed hates hates hates Trump!  Or maybe the Fed and the WH have the same relationship under Trump's rule as it did under Obama, that being that they each want the rich richer and know to continue they must have ZIRP forever.

Cursive's picture

ZIRP, like most things, has a shelf life and that shelf life is either close to reaching or has reached the expiration date.  People in flyover country are in terrible financial shape compared to 10 years ago.  Prepare for the ugly.

Dr. Engali's picture

We still have NIRP to look forward to before the ugly.

Cursive's picture

With Trump, the Fed is becoming less relevant.  That makes me think they will do something to make themselves more relevant....

NoWayJose's picture

Fed is letting Trump and his minions talk down the Dollar - and this does nothing to halt that. It can only mean one thing - Goldman is shorting the dollar!

NoWayJose's picture

Don't want to upset Mama Bear or Papa Bear!

Kirk2NCC1701's picture

The only smart and correct move that Mr. Yellen made in a long time.

I guess that her Goldman bosses told her what's what.

cowdiddly's picture

20 trillion makes you Coo Coo like dove huh bitch.

Get the hook and get this useless bag of the stage. She's breathing MY AIR.

Did'nt get the memo? "Rates will not normalize in my lifetime" B.B. the shank

onwisconsinbadger's picture

Janet to Drumpf : please don't fire me, I love the private dining with butler service at Fed. I will not raise rates.

Seasmoke's picture

Is Gold above $2000USD yet ??? How they are able to still keep it down is a great mystery !!!

actionjacksonbrownie's picture

I really thought Gold would be up today!

 

/s

NotApplicable's picture

The real mystery is who can stay solvent while selling billions of paper gold in a single order?

Which isn't that much of a mystery either, given all the magic checkbooks lying around.

JRobby's picture

CB price suppression. With all their might!

PM is SHTF backstop. Fiat to infinity!!!!

Consuelo's picture

 

 

 No great mystery at all.   It simply takes the cleverness that only 5000 years experience with what debt & usury can bring to bear.   Truth & honest money will win out in the end however.    And it will grind the dishonest usurer into powder.     

spastic_colon's picture

i'm still trying to figure out why aapl is up 7% today??  fed schmed.

Dr. Engali's picture

Didn't you hear? They channel stuffed....., er, I mean, sold like eleventy trillion NSA spy devices...er..., iPhones last quarter.

NotApplicable's picture

I wonder how much of this was subsidized by the wireless carrier wars?

spastic_colon's picture

i actually thought their report wasnt that good; other than the forced upgrades and phony japan numbers; I was forced to upgrade to a phone that allowed ios 10 (mine was a 4) so i "upgraded" to an SE........not alot of margin there i imagine.

Dr. Engali's picture

Whaatttttt? No rate hike? I"m Jack's complete lack of surprise.

economessed's picture

When you're in a box, all you see are walls.  Or if you're Janet, you squint a lot and tell the world how good the walls are, how well you are positioned inside of the box, and how dangerous it must be on the other side of the wall.

mary mary's picture

Gee, I wish interest rates were actually set by the Free Market, the way they would be in a a non-Communist country.

Peak Finance's picture

Off topic - 

Apparently the Superbowl is going to be a giant corporate mass-suicide event?

I just heard Fucking budwiser has an anti-Trump add? Are they fucking insane? Talk abut spitting in the face of your core demo! 

Half-time show featuring anti-trump Protests?

Any one hear of other Anti-Trump Superbowl stuff? 

Really lets make a list of who to short LOLZ!

 

Consuelo's picture

 

 

Well whaddya know, score one for the Goyim...   (Although people should be getting at least 6% on their money, but hey...)

Pasadena Phil's picture

"...there was no mention of the uncertainty around fiscal policy,..."

It's not the "uncertainty" that is important but the fact that there if FINALLY an administration that will address fiscal policy at all! It's like both the Bernancke and Yellen have been complaining about eternity: "monetary policy can only do so much".

Everything else in the statement reflects the new reality. There is no imminent need for the Fed to do anything including jaw boning. They are finally out of the spotlight and I am sure they are breathing a sigh of relief. Good for us.

Reaper's picture

Time to subpoena Fed records of US cash given to foreign banks.(Grand Jury and/or Congress) Use this malfeasance to end the Fed without a time consuming audit. As with Andrew Jackson, the bank is the enemy of the people and the people's President. The Fed claims to have $4,452,838,000+ in assets purchased with the people's currency. Take it back. https://fred.stlouisfed.org/series/WALCL

BitchesBetterRecognize's picture

S.B.D.S.

 

Same BULLSHIT  Different Speech...

 

Yellen has mastered her lying skills - she surely be useful for Trump when the SHTF arrives... 

ali-ali-al-qomfri's picture

my doctor said holding it in isn't really good for you.

Janet your gonna burst a capillary if you keep it in.

let's hear some noise......

angry_dad's picture
angry_dad (not verified) Feb 1, 2017 6:01 PM

YELLEN needs to BE FIRED

This incompetent has done nothing but undermine the us economy

Even a chimp flipping a coin would make better ecomonic dececisions that her.

JailBanksters's picture

We need more time to raise rates, 10 years is not nearly long enough.

 

Aussiekiwi's picture

The FED is trapped, all they can do now is talk and wring their hands in the hope that some miracle wiil come along and save them.