As expected the fed decided NOT to change the fed funds rate or discount rate. We could/ shoud see some USD flushing of fed funds for september to the downside I stick with my 99.5 to 100 for USDJPY shorts as attached. Attention now turns to Yellens speech in 30mins - deeper analysis to come then.
FOMC Rate Decision:
Fed Leaves Policy Rate Unchanged, Says Case For Rate Increase Has Strengthened Fed Sees Lower Rate Path in 2016, 2017, 2018 and Longer Run Fed Sees One Interest Rate Increase in 2016, Two in 2017, Three in 2018, 2019 D Three Fed Officials See No Rate Increase in 2016, Up From Zero in June Fed: Decided To Wait 'For The Time Being' For More Progress Toward Goals Fed Officials See Fed Funds Rate at a Median of 1.125% at End of 2017 Fed: Market-Based Inflation Compensation Measures Remain Low Just Four Fed Officials See More Than One Rate Increase in 2016 DJ News Fed: Expects Moderate Pace of Economic Growth, Labor Market To 'Strengthen Somewhat Further' Fed Officials See Fed Funds Rate at a Median of 0.625% at End of 2016 Fed: Near-Term Risks To Economic Outlook Appear Roughly Balanced Cleveland Fed's Mester, Kansas City Fed's George, Boston Fed's Rosengren Dissent On Fed Policy Action George, Mester, Rosengren Preferred To Raise Fed Funds Rate To 0.5% To 0.75% Fed Continues To Closely Monitor Global Economic, Financial Developments Fed Continues To Closely Monitor Inflation Indicators Fed: Economic Growth Has Picked Up From Modest Pace in First Half Fed: Market-Based Inflation Compensation Measures Remain Low Fed Officials See Fed Funds Rate at a Median of 1.125% at End of 2017 Fed: Survey-Based Inflation Expectations Measures 'Little Changed' Fed Officials See Fed Funds Rate at a Median of 1.875% at End of 2018 Fed Officials See Fed Funds Rate at a Median of 2.625% at End of 2019 Fed: Inflation Continued To Run Below 2% Target Fed Officials See Fed Funds Rate at a Median of 2.900% in Longer Run Fed Officials See Slightly Lower GDP in 2016, Unchanged in 2017, 2018 Fed: Inflation Expected To Rise To 2% Over Medium Term As Transitory Effects Fade Fed Median GDP Projections: 1.8% in 2016, 2.0% in 2017, 2018, 1.8% in 2019 Fed Officials See Unemployment Rate Higher in 2016, Unchanged in 2017, Lower in 2018 Fed: Labor Market Continued To Strengthen Fed Median Unemployment Projections: 4.8% in 2016, 4.6% in 2017, 4.5% in 2018, 4.6% in 2019 Fed: Job Gains Have Been Solid in Recent Months, Unemployment Rate Little Changed Fed: Household Spending Has Been Growing Strongly DJ News 2016.09.21 20:00:00 Fed Median Longer-Run Unemployment Projection: 4.8%, Unchanged From June Fed: Business Fixed Investment Remained Soft Fed Officials See Lower Inflation in 2016, Unchanged in 2017, 2018 Fed Median Inflation Projections: 1.3% in 2016, 1.9% in 2017, 2.0% in 2018, 2019 Fed Median Longer-Run Inflation Projection: 2.0%, Unchanged From June Fed Leaves Discount Rate Unchanged At 1.00% Fed Median Core Inflation Projections: 1.7% in 2016, 1.8% in 2017, 2.0% in 2018, 2.0% in 2019
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Fed Yellen Speech:
Yellen: Current Policy Should Help Economy Move Toward Goals Yellen: Welcome Development That More People Seeking Jobs, Unemployment Measures Steady Yellen: Household Spending Key Source Of Economic Growth Yellen: Fully Committed To Achieving 2% Inflation Objective Yellen: Recent Pickup In Growth, Labor Market Strengthen Case For Rate Increase Yellen: Decision Does Not Reflect Lack of Confidence in Economy Yellen: Chose to Wait for Further Evidence of Progress Toward Objectives Yellen: Cautious Approach to Paring Back Monetary Policy Support Is Appropriate Yellen: Expects Only Gradual Increases In Fed Funds Rate Yellen: Generally Pleased With How The U.S. Economy Is Doing Yellen: The Economy Has A Little More Room To Run Than Previously Thought Yellen: Expect Labor Market Conditions To Continue Strengthening Yellen: We Don't See The Economy As Overheating Now Yellen: Most Officials Judged Case for Immediate Increase 'Stronger,' But Sensible to Wait Yellen: Expects To See One Rate Increase This Year If Economy Stays On Course Yellen: 180k Jobs a Month is Faster Than Sustainable in the Longer Run Yellen: Don't Want to 'Significantly Overshoot' 2% Inflation Objective Yellen: Economy Has Shown More People Being Attracted Back Into Labor Force Yellen: Meeting Focused on Timing of Rate Increases Yellen: Less Disagreement Among FOMC Participants Than Speeches Suggest Yellen: Officials Struggling With 'What is the New Normal' DJ News Yellen: FOMC Not a Body That Suffers From 'Group Think' DJ News Yellen: FOMC Debating, Discussing Issues Related To Timing of Rate Increase Yellen: Partisan Politics Plays No Role in Our Decisions Yellen: We Do Not Discuss Politics At Our Meetings, Take Politics Into Account Yellen: Decision Not To Raise Rates Today Largely Based On Judgement Not Seeing Economy Overheating Yellen: Decision to Wait Based on Economic Factors, Not Political Yellen: November Is A Live Meeting, Will Assess Incoming Evidence Yellen: Highly Accommodative Policies Seem Necessary In Most Advanced Economies
YELLEN: THE ECONOMIC OUTLOOK IS INHERENTLY UNCERTAIN FED'S YELLEN: MONPOL NOT ON A PRESET COURSE FED'S YELLEN: CURRENT MONPOL STANCE SHOULD BE CONSIDERED "MODERATELY ACCOMMODATIVE" FED'S YELLEN: NEUTRAL FFR RATE QUITE LOW BY HISTORICAL STANDARDS FED'S YELLEN: LBR MKT SLACK BEING TAKEN UP AT SLOWER PACE, SOFT INFLATION, WE CHOSE TO WAIT FOR FURTHER EVIDENCE FED'S YELLEN: DECISION TO NOT HIKE NOT A REFLECTION OF LACK OF CONFIDENCE IN THE ECONOMY FED'S YELLEN: RISKS TO THE OUTLOOK ARE ROUGHLY BALANCED FED'S YELLEN NOTES INFLATION STILL SHORT OF OBJECTIVE GIVEN BASE EFFECTS FED'S YELLEN: LBR MKT CONDITIONS WILL STRENGTHEN FURTHER OVER TIME FED'S YELLEN: MORE PEOPLE ARE SEEKING AND FINDING JOBS - A WELCOME DEVELOPMENT FED'S YELLEN: SLACK LITTLE CHANGED THIS YEAR FED'S YELLEN: BIZ INVESTMENT REMAINS SOFT FED'S YELLEN: GROWTH HAS PICKED UP DRIVEN BY HOUSEHOLD SPENDING FED'S YELLEN: CASE FOR HIKES HAS STRENGTHENED, BUT DECIDED TO WAIT FOR EVIDENCE OF FURTHER PROGRESS