2016 Economic Calendar
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FOMC Meeting Announcement  
Released On 1/27/2016 2:00:00 PM
PriorConsensusActual
Federal Funds Rate - Target Level0.25 to 0.50 %0.25 to 0.50 %0.25 to 0.50 %

Highlights
FOMC policy makers are monitoring global economic and financial developments closely and they expect inflation, which is being held down in part by the drop in oil prices, to remain low in the near term. These are headlines that point to obstacles for Fed policy where rates are unchanged as expected, between 0.25 and 0.50 percent for the overnight fed funds target. But on the jobs front, the FOMC is confident calling improvement "strong" and "continuing." Future hikes are once again promised to be "gradual." The vote was 10 to zero.

Policy makers shifted the emphasis of the opening sentence from the moderate expansion of the economy in the December statement to a vote of confidence in the jobs market which has improved despite what they concede was slowing economic growth at year end. Both household spending and business fixed investment got a downgrade from solid to moderate and inventory investment is now described as slowing. Inflation compensation (that is the price of owning inflation-protected securities) is described as declining further but not survey-based measures of inflation expectations which they conclude are little changed.

There's plenty of risks at play in today's FOMC statement which doesn't seem to offer many offsets for the hawks. A rate hike at the March meeting is certainly a possibility but not an increasing one based on this statement. The FOMC is confident in the jobs market and is counting on an end to the oil collapse and an acceleration in wages to begin to lift inflation. Early reaction in the markets is limited with the Dow edging fractionally lower.

Consensus Outlook
The Federal funds rate target is expected to remain unchanged at a range between 0.25 to 0.50 percent, where it was lifted from zero to 0.25 percent at the December FOMC. Global events were not emphasized in the December statement but, given subsequent evidence of slowing in China and severe volatility in global markets, such risks are likely to be cited prominently in the January statement. On inflation, the December statement cited confidence among policy makers that inflation would begin to rise to their 2 percent target, but a change in wording is also possible here given global slowing and the continued collapse of oil prices. Four new voting members are rotating in from district banks and four have rotated out which will focus attention on the breakdown of the vote. Voting was a unanimous 10 to 0 for liftoff at the December meeting.

Definition
The Federal Open Market Committee (FOMC) is the policy-making arm of the Federal Reserve. It determines short-term interest rates in the U.S. when it decides the overnight rate that banks pay each other for borrowing reserves when a bank has a shortfall in required reserves. This rate is the fed funds rate. The FOMC also determines whether the Fed should add or subtract liquidity in credit markets separately from that related to changes in the fed funds rate. The Fed announces its policy decision (typically whether to change the fed funds target rate) at the end of each FOMC meeting. This is the FOMC announcement. The announcement also includes brief comments on the FOMC's views on the economy and how many FOMC members voted for and how many voted against the policy decision. Since the last recession, the statement also includes information on Fed purchases of assets, so-called "quantitative easing", which affects longer-term interest rates. Also, a key part of the announcement is guidance on potential changes in policy rates or asset purchases.  Why Investors Care
 
[Chart]
The Fed closely monitors the core PCE price index to indicate whether or not policy is approximately correct, overly accommodative, or too restrictive. The PCE price index is preferred to the CPI because it is more closely aligned to the cost of living than the CPI (which measures a fixed basket of goods & services.) This chart covers monthly data and the fed funds target rate reflects the monthly average. As such, it will not correspond to the most recent fed funds rate target announced by the Fed.
Data Source: Haver Analytics
 

2016 Release Schedule
Released On: 1/273/164/276/157/279/2111/212/14
 


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