FOMC Summary: Clueless

As expected, just hours after the PBOC cut rates and injected billions into the economy to give Xi Jinping ammunition in the upcoming trade war negotiations, the FOMC did... noting: the Fed kept the target range for the federal funds rate unchanged at 4.25-4.50%. The decision was unanimous. In its formal statement the FOMC said (changes in italics) “Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace.” In other words, the negative GDP growth figure for Q1 did not concern the Committee. However, looking ahead the possible challenges are mounting: “Uncertainty about the economic outlook has increased further. The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen.”

Recapping the statement, Goldman chief US economist David Mericle writes: