The Fed added language that its liftoff path is expected to be consistent with 2% inflation.
The Fed wants the option to hike in March but lacks the conviction to do so.
The Fed kept rates on hold despite growing confidence that inflation will hit its 2% target.
Minutes from the Federal Reserve’s 14 December meeting indicate the central bank has tilted in a hawkish direction. But that doesn’t mean the Fed is changing policy.
The Fed’s “dot plot” moved unmistakably in the hawkish direction for 2017.
The minutes reveal a committee that had expected to hike at the meeting on December 13-14. Developments since could only have strengthened the case.
Today’s Fed statement seems aimed at making as few waves as possible.
The all-in cost to a regime of global monetary policy cooperation could swamp any theoretical modest benefits.
The main takeaway from these 15 single-spaced pages is that the decision was a “close call” for several of the participants who did not in the end advocate for a rate hike in September.
With the obligatory “data dependency” caveat, this is a Fed that expects to hike later this year, which would mean at the December meeting.