2012 Economic Calendar
POWERED BY  econoday logo
U.S. & Intl Recaps   |   Event Definitions   |   Today's Calendar

FOMC Meeting Announcement  
Released On 4/25/2012 11:30:00 AM
Federal Funds Rate - Target Level0 to 0.25 %0 to 0.25 %0 to 0.25 %

The Fed kept policy rates unchanged and near zero with the funds target rate remaining at a range of zero to 0.25 percent. The key wording on policy guidance also is unchanged with the Fed continuing to state that economic conditions are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.

Regarding the economy, the Fed has retained essentially the same characterization as in March though one might see very marginal positive comments about labor market improvement. Overall, the Fed sees the economy as "expanding moderately." But the labor market comments are cautionary.

"Labor market conditions have improved in recent months; the unemployment rate has declined but remains elevated."

The meeting statement is rather general in its commentary about the economic outlook, but at first glance, the Fed forecasts for the economy appear to be little changed, suggesting very gradual improvement in growth and an easing in inflation. We will get more details on the forecast at 2:00 p.m. ET when forecast tables are released.

"The Committee expects economic growth to remain moderate over coming quarters and then to pick up gradually. Consequently, the Committee anticipates that the unemployment rate will decline gradually toward levels that it judges to be consistent with its dual mandate. Strains in global financial markets continue to pose significant downside risks to the economic outlook. The increase in oil and gasoline prices earlier this year is expected to affect inflation only temporarily, and the Committee anticipates that subsequently inflation will run at or below the rate that it judges most consistent with its dual mandate."

On other policy issues, Operation Twist continues-the Fed continues to keep downward pressure on longer-term interest rates. The balance sheet is being maintained at high levels with reinvestment of principal paid on agency debt and mortgage-backed securities and rollover of Treasuries. There is no mention of QE3 but options remain open.

"The Committee also decided to continue its program to extend the average maturity of its holdings of securities as announced in September. The Committee is maintaining its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate to promote a stronger economic recovery in a context of price stability."

Again, there was one dissenting vote.

"Voting against the action was Jeffrey M. Lacker, who does not anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate through late 2014."

Overall, despite some mixed signals from recent economic indicators, the Fed appears to be on hold. It is hard to see any differences between today's statement implications versus those in March. But there will be more details at 2:00 p.m. ET regarding Fed forecasts and the chairman's press conference is at 2:15 p.m. ET.

On the news, equities barely nudged lower.

Consensus Outlook
The FOMC announcement at 12:30 p.m. ET for the April 24-25 FOMC policy meeting is expected to leave policy rates unchanged. Traders will be focusing on any changes in the evaluation of the economy in the meeting announcement and on changes in guidance. Also, the Fed will release its quarterly forecast between the announcement and the chairman's press conference. And the forecasts get more attention now that fed funds rate forecasts are included.

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
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

2012 Released Schedule
Released On: 1/253/134/256/208/19/1310/2412/12

powered by  [Econoday]