The Fed delivered on its a rate hike this week, with the Federal Open Market Committee led by Chair Janet Yellen announcing a quarter point-hike in the Fed funds rate to 0.75-1 percent.
In the growth commentary of the Fed statement, there were changes to justify the Fed move. The unemployment rate was termed as remaining near its recent low and the opinion on business fixed investment was upgraded - suggesting firming up of the metric. Inflation was moving closer to the committee's 2 percent target, although the core measure was little changed and was trending below 2 percent, the statement said.
There was a dissenting vote this time around, with the Minneapolis Fed President Neel Kashkari voting against the move to raise rates.
The quarterly economic forecasts showed very little change. The median forecast for GDP growth for 2017 was unchanged at 2.1 percent, although there was a 0.1 percentage point increase in the GDP growth forecast for 2018 to 2.1 percent. The unemployment rate estimate for 2017 was unchanged at 4.5 percent. Core PCE inflation forecast for 2017 was nudged up to 1.9 percent from 1.8 percent.
The dot plot forecast pointed to two more hikes for this year, the same as in December, with the case for two more revisions strengthening after nine members suggesting it, up from six in December.
All said and done, future course of monetary policy still hinges very much on the incoming economic evidence and the fiscal stimulus Trump's team will be chalking out.
Among the other economic data released during the week, retail sales growth for February slowed in line with expectations.
The first glimpses into the manufacturing sector provided by the New York and Philadelphia Fed manufacturing surveys showed a slowdown in activity in March, although the rate of decline was less than feared. Price readings revealed that inflation perked up at wholesale levels, while consumer price inflation remained benign.
The unfolding week brings with it a host of Fed speeches as the quiet period ahead of the FOMC meeting expires. Traders can look ahead to explanations on the week's policy move from these speeches. Click on to read the upcoming week's key economic data/events.
by RTT Staff Writer
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