Josh Nye, Senior Economist at the Royal Bank of Canada, points out that the FOMC meeting was dovish and notes the 2019 rate hike plans were abandoned.
“We anticipated a cautious tone from the Fed, in keeping with recent comments that suggest officials are comfortable with the current policy stance and see no immediate need to get back to raising rates. But today’s policy statement and projections were still more dovish than we expected—and what investors expected, based on the immediate market reaction.”
“ Most notable is the shift in the Fed’s dot plot, which now shows a majority of FOMC members think the current rate setting will remain appropriate through the end of 2019. December’s dot plot had shown a median of two rate hikes were seen as appropriate this year. These new projections suggest the Fed’s base case is to leave policy steady this year—growth and/or inflation will have to surprise to the upside to warrant a return to tightening.”