It appears that more even than the Fed, the market, being a perfectly insane reflexive device, saw the 0.1% knee-jerk drop in stocks, and took that as a far greater THE NEW QE™ catalyst than anything just released by the Fed's printer. Gold is now higher than before the FOMC statement and QE-favorites Energy and Financials are notably outperforming.
And here is Goldman's take:
BOTTOM LINE: The statement following today’s FOMC meeting was largely unchanged from March and a touch more positive than we expected. No changes to the forward guidance and only minor changes to the description of the economy. Updated economic forecasts and Chairman Bernanke’s press conference scheduled for 2:00pm and 2:15pm, respectively.
MAIN POINTS:
- The FOMC’s post-meeting statement was little changed from the March meeting, as expected. The committee retained its guidance that the funds rate would likely remain exceptionally low “at least through late 2014”. Unsurprisingly, the committee decided to continue the ongoing Maturity Extension Program (MEP)—the “twist”—and said again that it was prepared to adjust its security holdings “as appropriate to promote a stronger economic recovery in a context of price stability”.
- The FOMC made a few small changes to its description of the economic backdrop. First, it removed the phrase that strains in global financial markets “have eased”. Second, the statement said that the unemployment rate “has declined” instead of “has declined notably”, acknowledging the slower pace of decline more recently. Third, it noted that inflation “has picked up somewhat”, mainly due to oil prices. All of these changes were in line with expectations.
- The statement included a few additional changes which were slightly more upbeat. It noted “some signs of improvement” in the housing market, before reiterating that the level of activity “remains depressed”. In addition, it said that growth should “pick up gradually” after a few quarters. The latter phrase is consistent with Fed officials existing forecast but a new addition to the statement.