Tyler Durden's picture

On the whole, Goldman viewed today's FOMC meeting as moderately more hawkish than expected. The post-meeting statement was close to their expectations but a few changes added a more upbeat tone. Fed officials revised up their forecast for core inflation and down their forecasts for unemployment, in both cases by larger amounts than many had expected. Likely as a result, some participants also lifted their forecasts for the federal funds rate. Chairman Bernanke’s press conference was more balanced—additional easing did not appear to be in his baseline, but he also did not take it off the table.

Goldman Sachs: FOMC Meeting: Summing Up


  • Results from today’s FOMC meeting—the statement, revised forecasts, and Chairman Bernanke’s press conference—were on the whole slightly more hawkish than we had expected. As the chairman noted in his remarks, Fed officials appear to see the stance of policy “as being approximately in the right place at this point”. We continue to expect easing at the June FOMC meeting, but as we have emphasized, this will require a further deterioration in the incoming data, particularly in news on the labor market.
  • Most of the post-meeting statement was in line with our expectations. However, the committee noted “some signs of improvement” in the housing market, and said that it expects growth to “pick up gradually”. Both phrases reflect known information, but the additions give the statement a slightly more upbeat tone than we had anticipated.
  • Revisions to the Summary of Economic Projections (SEP) showed a lower path for the unemployment rate and a higher path for core inflation than we expected. The central tendency forecast for the unemployment rate for Q4 2012 was 7.8-8.0%, down from 8.2-8.5% at the January meeting and below our expectation of 7.9-8.2%. Fed officials also trimmed their unemployment rate forecasts for 2013 and 2014 by 0.25 percentage points (pp) and 0.10pp, respectively (using the midpoints of the central tendency). The central tendency forecast for core inflation increased by 0.25pp for 2012, and 0.1pp for 2013 and 2014 (again using the midpoints).
  • Likely as a result of the lower unemployment rate trajectory and higher core inflation forecast, several officials also revised up their projections for the federal funds rate. In particular, none of 17 participants now forecasts that the first rate hike will occur in 2016 (from 2 in January), and seven now expect the first hike in 2014 (up from 5 in January). The mean and median of the year-end funds rate forecasts for the next three years changed only slightly: both increased by 0.20-0.25pp for 2014 and were nearly unchanged for the prior two years.
  • The updated funds rate forecasts now contrast even more starkly with the “exceptionally low …at least through late 2014” guidance in the statement: only 4 members now forecast a 0.25% funds rate for the end of 2014, and only 7 forecast a funds rate of less than 1% at that time. This implies that at least two members voted in favor of the statement despite forecasting an end-2014 funds rate of 1% or higher. Bernanke tried to reconcile this by noting that the forecasts were only “an input” to the committee’s decision process, and suggesting that the committee decision also reflected the balance of risks to the forecast. (However, see also point on definition of “exceptionally low” below.)
  • Chairman Bernanke’s press conference was more neutral for the outlook than the statement and the updated SEP, in our view. On one hand, he defended a question about the Fed’s current policy stance by arguing that the committee was not willing to tolerate materially higher inflation—implying this would be a risk associated with further easing. He also seemed to say that that the “exceptionally low” description for the funds rate could imply something higher than 0-0.25%, at least to some members. The exact quote (from the Fed’s online transcript) was: “One of the reasons that the language, in the statement is sometimes a little vaguer than you'd like is because we're trying to get a consensus among 17 or at least 10 people. And different members or participants in the FOMC might have different views of what exceptionally low means. I think it’s something close to where we are now.”
  • On the other hand, his comments on the policy options were tilted toward further easing. He mentioned the possibility of easing on a number of occasions, and said that the Fed would continue to monitor “whether unemployment is making sufficient progress towards our objectives”. In contrast, Chairman Bernanke said that bringing in the forward guidance would be warranted if the data were “much stronger than expected” (our emphasis).

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TheSilverJournal's picture

It's Schizo because if the Fed told the truth...that there would be ZIRP forever and QE to infinite...then the dollar would implode immediately. Bernanke must lie to perpetuate the ponzi.

iDealMeat's picture

Definitely,  I have a queasy feeling that something major behind the scenes is goin down..

Too many happy go lucky things going on today..  Fed Meeting, CNBC / GS orgy..

Romney set into pole position..  Perfect J. Edwards distraction..


I just don't like it.. 


I'll continue to opt out of as much partcipitation as I can thank you very much.


Michael's picture

Rents are going up and that adds to materially higher inflation, but we have "Brown Flight" from the USA so I guess it's a wash.

vast-dom's picture

too bad there isn't racist whatever the fuck color idiot flight....

Michael's picture

We will have QE3 by the end of June to coincide with the demise of Obama Care.

Michael's picture

Actually, now that I think of it; Brown Flight from the USA may add materially to higher wages and thusly more inflation. I stand corrected.

Mr Lennon Hendrix's picture

So they will invest outside of the US......move along.

Stackers's picture

We will definitely consider that we might need to possibly change varying policies if factors shift in uncertain directions.

Desert Irish's picture

the committee noted “some signs of improvement” in the housing market, and said that it expects growth to “pick up gradually”

o'kay just what brand of meth are you smoking?

The Big Ching-aso's picture



Ben's whole purpose when he speaks is to keep everybody guessing.  Guessing as to when this entire ponzi-ball of shit implodes.


Beam Me Up Scotty's picture

The ponzi-ball of shit isn't going to implode. I'm thinking explode is a better term. We will all be covered in shit when it happens!!

l.hauri's picture

this will work for sure for me. I am curious when we will see improvements. penis enlargement

CrashisOptimistic's picture

Coastal refineries are paying $119/barrel for oil and in some way, some how, this isn't being thought important by the Fed.

We're importing 10ish million barrels per day at that price.  That's 435 billion dollars sent out of the country each year for a product that is burned and disappears from existence.

How can this work?  Are they insane?

Elmer Fudd's picture

Yeah yeah yeah, "we gonna raise rates on Uncle Scam..."  blah blah blah...  cool, metals still on sale!

DonutBoy's picture

When historians look back at this time - they'll wonder how we could not see the charade in progress.  The smartest best-paid people in the world analyze the weightiness of the words of a few economics professors as the arbiters of asset prices and the masters of the valves that control the economy's steam.

It's utterly insane.  The fiat world has overrun the real world.  No one care about the quality of our factories, our schools, our power and data grids, our farms.  It's all a question of how well-positioned one is in the flow of forged money which is sucking up the world's assets.

Kids can't get jobs.  We don't know how to make anything anyone wants.  But the banks are OK, re-capitalized, nothing to worry about.  Go shopping.

What a pathetic state we've reached.  Fiat currency is not a failure - it is the biggest failure in our country's history,  Thomas Jefferson knew it from the start.

TWSceptic's picture

I think Ron Paul doesn't need to abolish the fed, if (or when) they continue their policies the dollar and fed will self-implode.

chump666's picture

The Fed are idiots.

e_goldstein's picture

Are you saying that this is a dip? And if so, should we buy it?

Peter K's picture

It looks like the ChairSatan has lost his control over the Board. Even Steve "The Tool" Liseman saw it :) 

"Dissonance", Baby!

Element's picture

Given this is a thread about weirdness, this may be a place for some news about the just announced major breakthrough in quantum computational weirdness ... and who knows, you just might want to invest in something that's REAL and may make you asquintillionaire ... but which won't be nearly as fabulously rich as it sounds ... by about 2016.

For anyone who hasen't heard this yet, things just changed radically today in the world of ultra-uber-duper-fast computing (i.e. really quite fast).



Researchers claim quantum computer breakthrough
By science and environment reporter Conor Duffy
April 26, 2012 13:27:13
Australian and international researchers say they have designed a tiny crystal able to run a quantum computer so powerful it would take a computer the size of the known universe to match it.
Details of the ion crystal, which is made up of just 300 atoms, are published in the Journal Nature today by a team from Australia, South Africa and the United States.
"We've surpassed the computational potential of this system relative to classical computers by something like 10 to the [power of] 80, which is 80 orders of magnitude, a really enormous number," the University of Sydney's Dr Michael Biercuk told AM.





How's those Apples now?  ... this thing would kick Deep-Thought's arse ...a really big number of times! (i.e. now we can work out what '42' means!!!)

And yes, garbage in still equals garbage out. But if this can be made into an everyday portable device, ... imagine that ... well, you can't ... it is beyond any human comprehension at this point what this means, or what this can amount to.  Hopefully more than shoot-em-up geek games and an SEC quantum universe server of over-endowed midget-porn and transvestites with billy-goats. 

I'd like to hope we can solve the fusion-problem and build some really neat ultra-uber-duper-fast quantum spaceships and foist a huge colonial-war upon our general galactic neighbourhood.  The aliens could make a movie called the, "Attack From the Planet of the Apes", and we could lord it over them with wonderous and brutal technologies.  (the Paul Krugman Principle PKP would thus also be satisfied ...)

hmmm ... I wonder if it comes with a type of quantum-memory? ... seems to me this could be a wee throughput bottle-neck.

Seem to me this is one of those technical and scientific breakthroughs that could change everything we 'know' ... about ... pretty much everything.

Dr.Engineer's picture

Can someone please explain how many current QE operations are ongoing?  I know the Fed has not stopped printing, nor has Japan or EU.  But it isn't clear what these backdoors are.


DavidC's picture

I think it's just Twist (due to finish in June) and the Dollar Swaps with the ECB et al. Not sure about QE, I think that's all done for the moment.

Please correct me if I'm wrong, anyone.

DavidC's picture

"...additional easing did not appear to be in his baseline, but he also did not take it off the table".

There's a surprise. He WON'T QE unless he HAS to while jawboning is keeping the stock market(s) up.


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l.hauri's picture

what do you think that we should do next? What is the treatment?

daniel123's picture

I think there is a big relation of FED in crude oil rates, In my past experience FED increased rates while crude oil prices were also increasing.

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