Back
28 Jan 2015
FOMC: No changes to key policy language - Nomura
FXStreet (Bali) - According to Nomura Economists, the FOMC is not expected to communicate material changes to the key policy language today.
Key Quotes
"While the economy has clearly slowed somewhat since the third quarter, and sharply lower oil prices and the strong dollar are affecting inflation, the momentum in the economy is still significant. Strong growth in employment is generating significant increases in income. Consumer confidence continues to improve, including expectations for both future job prospects and income."
"Housing activity – both starts and sales – has picked up suggesting that low long-term rates (ten-year Treasury yields are down more than 40bp since the December meeting) are boosting activity. Moreover, while inflation compensation in financial markets continues to fall, survey measures of long-term inflation expectations have not deteriorated."
"This somewhat mixed record in recent economic data is not obviously at odds with the FOMC’s economic outlook. We would argue that the data, at this point, do not require a shift in the FOMC’s expected path for policy."
"Moreover, nothing in recent statements of FOMC officials suggests that they are planning to shift the expected trajectory of policy at this point. (In our judgment, FOMC members have not altered the essence of the publicly stated views on the timing of “liftoff.”
"Consequently, we do not expect material changes to the key policy language (although, some cleanup is required after December), and we do not expect the language on the economy to emphasize downside risk to activity and/or core inflation."
Key Quotes
"While the economy has clearly slowed somewhat since the third quarter, and sharply lower oil prices and the strong dollar are affecting inflation, the momentum in the economy is still significant. Strong growth in employment is generating significant increases in income. Consumer confidence continues to improve, including expectations for both future job prospects and income."
"Housing activity – both starts and sales – has picked up suggesting that low long-term rates (ten-year Treasury yields are down more than 40bp since the December meeting) are boosting activity. Moreover, while inflation compensation in financial markets continues to fall, survey measures of long-term inflation expectations have not deteriorated."
"This somewhat mixed record in recent economic data is not obviously at odds with the FOMC’s economic outlook. We would argue that the data, at this point, do not require a shift in the FOMC’s expected path for policy."
"Moreover, nothing in recent statements of FOMC officials suggests that they are planning to shift the expected trajectory of policy at this point. (In our judgment, FOMC members have not altered the essence of the publicly stated views on the timing of “liftoff.”
"Consequently, we do not expect material changes to the key policy language (although, some cleanup is required after December), and we do not expect the language on the economy to emphasize downside risk to activity and/or core inflation."