This is a couple softish data points, not Lehman Brothers collapsing

Goldman Sachs is out with a note saying the Federal Reserve will probably downgrade its forecasts and make changes to the statement after today's data. JPMorgan says the Fed will remove the reference to recent data being "transitory."

The US dollar, meanwhile, is in panic mode. USD/JPY is down 130 pips from just before the data was released. Ten year yields are down 10 bps.

Let's take a deep breath.

CPI was 1.9% compared to 2.0% expected. Retail sales were -0.3% compared to a flat reading expected. There are good and bad caveats all over the place in both series.

It's disappointing data but it's not Armageddon. Fed economists, who spent months preparing the latest forecasts, aren't going to scrap them on the morning of the decision. No one on the committee is standing up and making a speech today on how their views have just shifted today after months of talking about an inevitable economic pickup.

This is a few soft data points, not an investment bank collapsing. The Fed isn't going to panic like a bunch of Wall Street traders on their first day on the job.

They will do what they always do: Avoid committing to anything and point to the data. That means they will continue to forecast a pickup and hikes but there will be a signal that they will need help from better numbers to execute.

Look at if from their perspective. Warning about a slowdown in the economy looks like yet-another U-turn when there is no big-picture reason to worry.

I believe the Fed will eventually shift because inflation just isn't part of the 21st century equation but it's going to be a slow process, not a hastily-prepared statement because of a soft CPI report.

In order for the dots to shift, six people are going to have to switch to no more hikes from one or two. I just can't see that happening.

Coming into the day, I would have said the dollar could go either way depending on the nuances of the statement but now I'm leaning towards a relief rally. The Fed will play it down the middle.