Highlights of the FOMC statement released January 28, 2015:
- Inflation has declined and may decline further but should increase over the medium term as the labor market improves and temporary effects from low energy fade
- Economic activity has been expanding at a solid pace upgraded from moderate pace
- Timing of rate hikes continues to depend on incoming information
- Repeats rhetoric on market-based measures of inflation and survey based measures sending opposite signals
- Labor market slack continues to diminish
- Risks to labor market and economy remain nearly balanced
- Fed will continue to reinvest maturing QE bonds
- Vote was unanimous
There will be no projections released with this statement and there is no press conference scheduled afterwards.
Bottom line: The Fed is firmly in the wait-and-see mode. It sets up March as more of a deadline for the Fed to make a commitment to hiking rates or backing off.
I was looking for some dovish hints but there is nothing here to suggest the Fed has drawn any conclusions and no comments on the US dollar. That’s probably a green light for continued dollar strength, or at least for data-driven trading.
