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Det heter inte FED UP utan anledning! :))

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"Keep it simple stupid, and don't fall in love with the down side!"

GS:

BOTTOM LINE: The March FOMC statement was relatively little changed from the prior meeting. Changes to the policy language were not clearly more hawkish or dovish. The Chairman's remarks were largely in line with his recent public comments, suggesting continued policy accommodation for some time.

MAIN POINTS:

1. In reviewing economic conditions, the FOMC noted a "moderate" pace of economic growth, compared with a "pause" late last year. However, it also noted that fiscal policy had become somewhat more restrictive, signaling increased concern about fiscal drag. We do not read much into the removal of language around declining strains in global financial markets, as this likely simply reflects that global financial conditions were similar to those seen at the time of the January meeting, after easing in the prior intermeeting period.

2. Within the policy paragraph, the FOMC noted that it "decided to" continue purchasing longer-term securities at a rate of $85 billion per month, a change from the last statement in which it stated that it "will" continue purchasing securities at this rate. While a small change, it suggests the possibility of more debate around this issue at the meeting. There was also a change to the language around the criteria used for determining future purchases: "in determining the size, pace, and composition of its asset purchases, the Committee will, as always, continue to take appropriate account of the likely efficacy and costs of such purchases, as well as the extent of progress toward its economic objectives" (change italicized). This clarifies that the policy decision on continuing QE is not an all or nothing decision, but that the Committee could reduce the rate of purchases as the labor market improves (or increase it if conditions worsen).

3. The Statement of Economic Projections (SEP), last published at the December meeting, showed a small downtick in the growth profile for the coming three years, a lower path for the unemployment rate (reflecting the decline in the unemployment rate since the last set of projections) and a slight reduction in the forecast for core PCE price inflation in 2013. There was also a small change to participants' expected date of the first rate hike, with one participant moving from 2013 back to 2014. The majority of participants (13/19) continue to see rate hikes beginning in 2015.

4. The Chairman's remarks in the post-statement press conference did not deviate significantly from his recent public remarks and testimony. With regard to tapering, the Chairman was reluctant to answer whether the Committee was near or far from tapering purchases, but noted that purchases could be varied in response to incoming economic data, although the pace of purchases would not be changed frequently. On the outlook, he stated unequivocally that there had been an improvement in the data over the past 4 to 5 months, but noted that he would like to see confirmation that the improvement in the data is durable, unlike that seen in previous years when stronger data early in the year later gave way to renewed weakness.

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