"Flexible" Fed Loses "Patience"; Cuts Growth, Inflation Forecasts: Redline Comparison

Evan as The "boxed-in" Fed nears the vinegar strokes of its easing cycle, today's statement continued to offer something for everyone (hawks, doves, bulls, & bears) to hold onto:

  • *FED DROPS PATIENT STANCE ON INTEREST-RATE RISE GUIDANCE (hawk)
  • *FED SAYS ECONOMY `HAS MODERATED SOMEWHAT,' JOB MARKET IMPROVED (dove)
  • *FED SEES 2015 GDP GROWTH OF 2.3%-2.7% VS 2.6%-3% DEC. EST. (dove)
  • *FED WANTS TO BE `REASONABLY CONFIDENT' ON INFLATION FOR LIFTOFF (hawk)

So, despite previous Fed promises, we have seen dismal macro data, no consumption gain from low gas prices, and USD strength headwinds; and yet, as they shift growth expectations in their dot plot, we're supposed to believe that. The bottom line: Fed to Markets: "you're on your own"-ish: undertainty is back. Full redline below...

Pre-FOMC: S&P Futs 2059, EUR 1.0650, 10Y 2.05%, Gold $1152

Additional Headlines...

  • *FED SAYS RATE RISE ALSO TIED TO MORE LABOR-MKT IMPROVEMENT
  • *FED: RATE GUIDANCE DOESN'T MEAN FOMC DECIDED ON LIFTOFF TIMING
  • *FED SAYS RATE RISE `REMAINS UNLIKELY' AT APRIL FOMC MEETING
  • *FED SAYS HOUSING REMAINS SLOW, `EXPORT GROWTH HAS WEAKENED'
  • *FED REPEATS INTL DEVELOPMENTS TO BE TAKEN INTO ACCOUNT
  • *FED SEES 2015 GDP GROWTH OF 2.3%-2.7% VS 2.6%-3% DEC. EST.
  • *FED SEES 2015 JOBLESS RATE 5%-5.2% VS 5.2%-5.3% IN DEC. EST.
  • *FED SEES 2015 PCE INFLATION 0.6%-0.8% VS 1%-1.6% IN DEC. EST.
  • *FED SEES LONGER-RUN UNEMPLOYMENT RATE 5%-5.2% VS 5.2%-5.5%

Here is what the major changes are:

  • Fed notes that recent growth (no longer activity) has "moderated somewhat" instead of "expanding at a solid pace."
  • Fed adds that "export growth has weakened"
  • Fed removes measures of inflation compensation "have declined substantially" and replaces with "remains low"
  • Fed changes "inflation is anticipated to decline further" with "remain near its recent low level"

And then when it comes to the patience language there is a whole lot of crazy stuff going on- for the full redline comparison see below.

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Time to raise rates? Seems like the perfect time!!

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This seemed to sum up The FOMC's decision-making process perfectly...

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Here is what the dot-plot looked (and market expectations) looked like before... (notice how much more dovish the market remains)

 

And after...

 

Word Count rise - bullish

 

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Full Redline...