FOMC in detail
The Federal Open Market Committee yesterday left unchanged the pace of bond purchases unchanged at $85 billion a month.
Economic projections: The FOMC said that “downside risks to the outlook for the economy and the labor market” have diminished. The policymakers increased their GDP growth forecasts for 2014 to 3-3.5% and reduced the outlook for unemployment to 6.5-6.8%.
Bernanke’s comments: “If the incoming data are broadly consistent with this forecast, the committee currently anticipates that it would be appropriate to moderate the pace of purchases later this year… we will continue to reduce the pace of purchases in measured steps through the first half of next year, ending purchases around mid-year.”
According to Credit Agricole, “Bernanke was more explicit than markets had expected. Rising US yields will spur broad dollar buying. The dollar's direction is now set.” Sumitomo Mitsui warns that “markets will remain volatile because any change in the Fed’s policy is driven by economic data.”