While Markets See Growth, Fed Officials Rightly Wait and See

The Federal Reserve is a lot less exuberant than financial markets about the economic outlook, and the reason seems to be fiscal policy. Investors expect President Donald Trump and Congress to deliver a solid boost to growth. The Fed is much more agnostic. Based on what’s come out of Washington lately, that agnosticism seems justified. On Wednesday, the Fed raised its target range for short-term interest rates by a quarter of a percentage point. Investors hadn’t expected the increase until officials signaled it two weeks ago, and many assumed the Fed had turned more bullish on the economy. It hasn’t. The median projection of officials’ forecast this year is for 2.1% growth, unchanged from December and right in line with the average for the last eight years. It still expects unemployment to average 4.5% over the next three years, down a bit from 4.7% now, and to Continue reading "While Markets See Growth, Fed Officials Rightly Wait and See"

Economists React: ‘An Opportunistic Federal Reserve Raises Rates’

The Federal Reserve voted Wednesday to raise interest rates by a quarter percentage point to between 0.75% and 1%. Wednesday’s move was the first in 2017 and only the third in the past decade. Fed officials in economic projections accompanying their statement suggested it remains appropriate to raise rates two more times this year. Here are some early reactions from economists. “An opportunistic Federal Open Market Committee raises rates…With nine members expecting three hikes in 2017, the FOMC seems in no more of a hurry to normalize rates in March than it was in December despite the recent shift in communications. By hiking today and not steepening its median policy path, we view today’s decision as the FOMC taking advantage of favorable financial market conditions as opposed to an opening step to a faster pace of rate increases.” — Michael Gapen and Rob Martin, economists at Barclays PLC “The Continue reading "Economists React: ‘An Opportunistic Federal Reserve Raises Rates’"

Parsing the Fed: How the March Statement Changed from February

The Federal Reserve releases a statement at the conclusion of each of its policy-setting meetings, outlining the central bank’s economic outlook and the actions it plans to take. Much of the statement remains the same from meeting to meeting. Fed watchers closely parse changes between statements to see how the Fed’s views are evolving.

The following tool compares the latest statement with its immediate predecessor and highlights where policy makers have updated their language. This is the March statement compared with February.

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Parsing the Fed: How the February Statement Changed from December

The Federal Reserve releases a statement at the conclusion of each of its policy-setting meetings, outlining the central bank’s economic outlook and the actions it plans to take. Much of the statement remains the same from meeting to meeting. Fed watchers closely parse changes between statements to see how the Fed’s views are evolving.

The following tool compares the latest statement with its immediate predecessor and highlights where policy makers have updated their language. This is the February statement compared with December.

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Corrections & Amplifications The tool compares the Fed’s December statement with its statement in February. An earlier version of this article incorrectly said January. (Feb. 1, 2017) RELATED Fed Leaves Policy Rate Unchanged, Offers No Hint on When It Might Next Move The Uneasy Politician: Janet Yellen Is Struggling to Fend Off the Fed’s Many Critics

What Does Donald Trump’s Election Mean For the Fed? WSJ Pro Explains

Join the WSJ Pro Central Banking live video chat at noon ET about Donald Trump and the Federal Reserveon.wsj.com/central-bank-briefing Virtually overnight, Mr. Trump’s election victory upended expectations for the Fed this year, including the path of interest rates, and the leadership and governance of the institution. While Fed officials plan to raise interest rates gradually over the next few years, they’re also grappling with “considerable uncertainty” about over how Mr. Trump’s fiscal policies may affect the economy and monetary policy, Chairwoman Janet Yellen said in December. The new president may also have the opportunity to dramatically reshape the seven-member Fed board of governors. He’s already vetting candidates for two vacancies on the board, and he said during the campaign he probably would not nominate Ms. Yellen to a second term as chairwoman. That means he would likely announce his pick by late summer this year, to allow Continue reading "What Does Donald Trump’s Election Mean For the Fed? WSJ Pro Explains"

Economists React to the December Jobs Report: ‘Very Close to Full Employment’

Job creation slowed in December but other details pointed to a tightening labor market. The economy added 156,000 jobs last month, while the jobless rate rose slightly to 4.7% as more Americans entered the labor force. Workers’ hourly wages grew 2.9% over the past 12 months, the strongest yearly gain in more than seven years. Here’s how economists and analysts reacted to Friday’s report. “For the year, the economy averaged job creation of about 180,000 per month—a solid result, but one that represents the slowest pace since 2012. While this is partially reflective of the slowdown in the pace of economic growth, it also reflects a labor market that is increasingly tight. Employers are simply having a harder time filling open positions as the economy nears full employment.“—Jim Baird, Plante Moran Financial Advisors “This solid report further underlines the Fed’s point in December that the Continue reading "Economists React to the December Jobs Report: ‘Very Close to Full Employment’"