Fed sees moderate growth, job gains after Q1. The Fed says the winter had a negative effect and it reflects transitory factors. The Fed totally removed forward guidance. Everything is data dependent.
The US dollar is stronger in the initial reaction, but it’s retracing its gains. Update: it is strengthening once again.
Regarding inflation, it wants to be confident. Energy, import price have effects on inflation. About jobs, it acknowledges that these have moderated but expects them to bounce back.
From the statement, here is an interesting snippet household real incomes:
Growth in household spending declined; households’ real incomes rose strongly, partly reflecting earlier declines in energy prices, and consumer sentiment remains high.
Does this imply optimism to see more spending in Q2?
Analysis: Does the Fed see the US consumer going on a shopping spree?
More: EUR/USD broke out of wide range – is it the real thing?
There were no dissenters once again and no comments on the dollar. There are no surprises here.
Here is the part related to the rate hike. As you can see, there is no guidance whatsoever:
In determining how long to maintain this target range, the Committee will assess progress–both realized and expected–toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term
The Fed was not expected to change its policy in April, as it stated this quite explicitly last time. However, there are 5 things to look out for, as explained in the preview.
The most critical point is the Fed’s view of the economy, given the horrible GDP report. Is the Fed worried or does it see it as transitory?
The greenback was on the back foot towards the publication, especially against the euro, pound and the Aussie.
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