No change in Fed’s policy!
The quantitative easing program (QE3) continues as planned and assessments regarding the date for an interest increase remains unchanged.
During the rate decision last week, members of the U.S. monetary committee noted that the economy has returned to a moderate growth after a pause at the end of last year.
Additionally, FOMC (Federal Open Market Committee) participants revised their unemployment rate forecasts slightly lower for 2014 and 2015.
Nevertheless, the vast majority of participants still anticipate that the Fed will not need to hike its key policy rate until 2015.
Despite the extensive public discussion of the potential costs of more quantitative easing, the FOMC reaffirmed its intention to buy $85 billion in assets each month.
The FOMC remained vague as to when it may consider altering the size of its monthly purchases.
However, it did explicitly note that the extent of progress towards its economic objectives would be a key factor in determining the size, pace and composition of its purchases.
That may signal downsizing its asset purchases later this year, should the recent improvement in labor market data prove to be more than temporary.
We note that due to the fact that the Fed’s statement pretty much conserved the status quo, it induced only minor changes at financial markets.