Wednesday, April 27, 2016

"Economists React to the Fed Decision: ‘More Optimistic…Than in March’"

From Real Time Economics:
Federal Reserve officials voted to hold rates steady at the conclusion of their two-day policy meeting Wednesday. They appear to be in no rush to move them higher in the weeks ahead amid signs of slower economic activity and lingering concerns about inflation and global developments. Here’s what economists had to say about the latest policy statement:
The statement was more optimistic-sounding than in March…consistent with tightening again soon—potentially in June—if the data and markets are supportive. And while the formal risks assessment was not reinserted, the reference to ‘global economic and financial developments’ posing risks was dropped. Instead, officials will ‘monitor’ ‘global economic and financial developments,’ along with inflation indicators.”—Jim O’Sullivan, High Frequency Economics

“On the domestic economy, the statement draws attention to the split between the ‘further’ improvement in the labor market ‘even as growth in economic activity appears to have slowed.’ They don’t say explicitly that the labor data are more reliable than the GDP numbers but it’s easy to conclude that that’s what they think.…Overall, the shifts in the language suggest the Fed wants to keep its options open, and to make sure markets know it. June is therefore in play, but we still think the Brexit referundum just eight days after the meeting is a serious barrier to action.”—Ian Shepherdson, Pantheon Macroeconomics