The FOMC statement is almost identical to the one given in March with its comments both on the economy and inflation and their current policy. There is a slight acknowledgement of the influence of higher energy prices on inflation as they said “inflation has picked up somewhat, mainly reflecting higher prices of crude oil and gasoline” vs saying “inflation has been subdued in recent months, although prices of crude oil and gasoline have increased lately” in the March statement. In terms of action, the policy remains the same and Lacker again took issue with saying rates will remain “exceptionally low” thru late 2014. Bottom line, the statement is as expected and eyes look to the June meeting for the Fed to tell us what will happen after OT expires at the end of June which we’ll likely get hints at in speeches prior. The Bernanke press conference may even reveal their intentions at 2:15pm but I assume he’ll take a more ‘play it by ear’ approach. There is one thing for sure though, the Fed will do more if the economy and stock market roll over but will likely sit tight if things remain as is or of course improves.
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