Highlights of the June 14, 2017 FOMC statement

  • FOMC hikes rates to 1.00%-1.25%, as expected
  • Maintains forecast for one more hike in 2017
  • Says it's 'monitoring inflation developments closely'
  • Expects to implement balance sheet normalization this year
  • Fed will slowly halt reinvestment with adjustments quarterly until it reaches $30B per month in Treasuries and $20b/month in MBS
  • Does not specify size of long run balance sheet
  • For now will continue to reinvest expiring bonds until rate normalization is well underway
  • Sees economy and job market on more solid footing, now sees unemployment rate falling to 4.2% through 2019
  • Household spending has picked up and fixed investment has continued to expand
  • Kashkari dissented in favor keeping rates unchanged

Yellen will hold her regular new conference at 2:30 pm ET.

Statement before:

Inflation measured on a 12-month basis recently has been running close to the Committee's 2 percent longer-run objective. Excluding energy and food, consumer prices declined in March and inflation continued to run somewhat below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

Statement now:

On a 12-month basis, inflation has declined recently and, like the measure excluding food and energy prices, is running somewhat below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

More on inflation before:

inflation will stabilize around 2 percent over the medium term. Near-term risks to the economic outlook appear roughly balanced. The Committee continues to closely monitor inflation indicators and global economic and financial developments.

Now:

Inflation on a 12-month basis is expected to remain somewhat below 2 percent in the near term but to stabilize around the Committee's 2 percent objective over the medium term. Near term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely.

That's hardly a change at all. The dollar has tried higher and lower but is a shade better at the moment and given that there is no change in stance in the statement, that's the right reaction in my opinion. No final verdict will come until Yellen speaks.