2016 Economic Calendar
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FOMC Meeting Announcement  
Released On 9/21/2016 2:00:00 PM
PriorConsensusConsensus RangeActual
Federal Funds Rate - Target Level0.25 to 0.50 %0.375 %0.25 % to 0.50 %0.25 to 0.50 %

Highlights
The voting spread to keep rates unchanged narrowed sharply in what is otherwise a mixed FOMC statement that, in the end, does keep alive a rate hike later this year. The assessment of the economy is little changed from the July meeting with the economic pace described as moderate and with perhaps a little less emphasis on the strength of the labor market. Household spending is once again described as strong and business investment is once again described as soft. The inflation assessment is unchanged, described as running below target. Global risks are once again cited but again not in detail.

What is different is the degree of support for an immediate rate hike as Cleveland's Mester and Boston's Rosengren joined Kansas City's George, making it a 3 to 7 vote to keep rates unchanged. And in a possible indication of a future hike, the statement now includes the phrase that economic risks "appear roughly balanced" which was the phrase that the FOMC inserted before hiking rates back in December.

This meeting includes quarterly projections which also hint at an approaching rate hike as 10 of the 17 FOMC forecasters see one rate hike coming this year. Yet other forecasts are dovish with only 2 hikes seen next year, down from 3 at the June meeting. Growth and inflation forecasts have been shaved here and there. Both stocks and bonds are moving slightly higher in early reaction to the statement.

Consensus Outlook
The Federal funds rate target has been unchanged at a midpoint of 0.375 percent between a range 0.25 to 0.50 percent since December last year, when the FOMC launched what was expected to be a series of rate hikes through this year. Recent growth data have been solid, led by employment and including consumer spending, but global demand has been soft as has business investment especially in the energy sector. Inflation pressures have been minimal though the latest Beige Book, prepared in advance for this meeting, did cite emerging evidence of wage pressures. At the last FOMC back in July, the committee voted 9 to 1 to keep rates unchanged.

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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