Federal Reserve FOMC Policy Meeting Results

The official FOMC policy statement and quarterly economic projections were released at 14:00 EDT on Wednesday afternoon. The statement was really little more than a simple "cut and paste" job almost all the way through to its conclusion. The first part of the second sentence of the first paragaph was the only place where any change was made at all. The line "Job gains have moderated since early last year but remain strong." was edited to "Job gains have remained strong." Simply put, the image of the labor market that the message illustrates is both simplified and strengthened, which I am not sure I see as accurate. There was absolutely no increased concern expressed over rising inflation in this statement, though the line from the January statement about it not being "appropriate to reduce the target range until it (The FOMC) has gained greater confidence that inflation is moving sustainably toward 2 percent." was re-used, or as I said above... "copied and pasted."

On to the economic projections. 2024 year-end GDP was upgraded at the median expectation from 1.4% to 2.1%, the year-end unemployment rate was increased slightly from 4.0% to 4.1%, PCE inflation was left where it had been at growth of 2.4%, and Core PCE inflation was increased from 2.4% in December to 2.6%. As for the Fed Funds Rate... what many pundicts refer to as "the dot plot", the committee left their median projection where it whad been, at 4.6% or about 75 basis points lower than the actual fed Funds rate it is now. This will likely disappoint economists like myself that had hoped for a downgrade to cuts of 50 basis points for this calendar year, but not traders and investors. The "markets" crowd will likely cheer the fact that the median expectation was left where it was. It may or may not be important to understand that the mean or average did move even if the median did not. The mean actually did grow from 4.7% to 4.8% as the number of dots now above the 5% level for the year end rate moved from three dots to four (out of 19), so not overtly, but at least there does seem to be some awareness across the group that inflation has not yet been brought to heel. Going forward, the committee sees the Fed Funds Rate at 3.9% at year's end 2025, up from 3.6% at that time back in December.