April 25 - The Fed economic projections show a strong consensus that the Fed won't move till 2014 at the earliest, says Reuters Columnist James Saft.
We've had a look at the Federal Open Market Committee participants outlook for the economy. For inflation for employment and crucially for interest rates over the next several years and take away I think is that the hawks. Are just as hawkish as they were. The dogs had gotten slightly left of bush but don't expect. Anything other than what the Fed is promising which is it interest rates are not going to rise at least until the end of 2014. What we see is that there's a really wide dispersion of views on the committee and that's not usual and that may make you think that there's a real risk that rates are gonna go up soon but I don't believe that's true. The people who were hawkish last time hawkish now. And they think maybe -- horizon this year next. Bought that consensus that group led by Bernanke that expects and 2014 or beyond they've scaled -- back a little bit. Nobody's saying 2016 now there hardening around that 2414. Day. I think the thing to remember is that everybody gets SA. Some of them get a vote but some that are more important than others and Bernanke is leading consensus and that consensus is saying we are gonna keep rates on hold for the time being. If you look at their projections for growth for unemployment and for inflation. Not change there and I don't think we were really gonna get much insight. I think the committee is really struggling with trying to measure. How quantitative easing is working whether or not they're gonna need more. And really how the economy's going to do during a balance sheet recession in terms of investors. Leave them in a difficult situation because. You might want to hold bonds based on this because you're not gonna get whipsawed in the next couple years. But you really aren't looking kind of bad risk reward ratio there's not a lot of upside. There's this you to the down side. But frankly compared to some of the alternatives it looks pretty good.