FOMC Recap: Technical Tweaks Do Little To Dissuade Doves

 | May 01, 2019 02:39PM ET

In Tuesday’s FOMC preview, we noted that we were unlikely to see any immediate changes to monetary policy, apart from a possible technical tweak to the central bank’s interest on excess reserves (IOER).

As it turns out, that’s precisely what we saw…and not much else. In a unanimous vote, policymakers decided to leave the primary Fed Funds rate unchanged and cut the IOER by 0.05% to 2.35%. Beyond that, the central bank made several minor tweaks to the first paragraph of its monetary policy statement:

  • Noted that economic activity “rose at a solid rate” (from “slowed” in March)
  • Removed a reference to payroll employment being “little changed”
  • Noted that growth slowed (from “indicators pointed to slower growth” in March)
  • Removed a reference to inflation declining “largely as a result of lower energy prices”
  • Noted core inflation has “declined” and is “running below 2%”

With little else to go on, we expect the downgrade to the central bank’s inflation assessment to take center stage in Chairman Powell’s upcoming press conference.