The Federal Open Market Committee (FOMC), as expected, did not make any changes to policy, such as raising interest rates from current rock-bottom levels. However, the tone of the statement was a bit more neutral towards the subject, compared to the accommodative language seen in recent years.
Much of the discussion surrounded whether or not the FOMC would remove the key word ‘patient’ from the official statement. As was the case a decade ago when Chairman Greenspan did this, the change implies a rate hike could be appropriate at any upcoming time the committee chooses. Of course, there’s a lot of nuanced semantics here and the Fed remains careful to avoid a misinterpretation or misstep.
April was downplayed as a possible jumping off point for rates, but this entire process as of late has been data-dependent, so it could be June or a bit later. They’ve acknowledged the ‘moderating’ of conditions recently, and weakness in housing, but also the strength in labor growth and potential tailwind from lower oil prices.
In case you were wondering, the FOMC is the monetary policy-making body of the Federal Reserve System. It is composed of 12 members–the seven members of the Board of Governors and five of the 12 Reserve Bank presidents.
The FOMC schedules eight meetings per year, one about every six weeks or so. The Committee may also hold unscheduled meetings as necessary to review economic and financial developments. It issues a policy statement following each regular meeting that summarizes the Committee’s economic outlook and the policy decision at that meeting. Four times per year the Chairman holds a press briefing after the FOMC meeting to present the committee’s current economic projections and to provide additional context for policy decisions.