The Federal Reserve on Wednesday announced the end of its long-running bond-buying program. The central bank also stuck to an assurance that short-term interest rates would remain near zero for a “considerable time.” Economists largely expected the end of the Fed’s third round of quantitative easing, as it was known. But many found the statement more “hawkish,” easing off concerns about progress in the labor market....MORE
Here’s what some economists are saying:
“In short, [the Fed's statement was] largely as expected, but, if anything, a more positive tone, at least on the labor market. We expect tightening will start by June 2015, but, of course, that will depend on the data. For now, there is no urgency for officials to use the statement to signal an imminent move. Bond yields have risen a few basis points since the statement was released.” –Jim O’Sullivan, High Frequency Economics
“As expected, the Fed today announced an end its third round of large-scale asset purchases (aka QE3). Slightly less expected, however, is that despite the recent market volatility, the statement issued after the FOMC meeting was, if anything, more hawkish…On balance, the Fed believes it is getting closer to meeting the full employment side of its mandate, while it is not necessarily convinced it is losing ground in meeting the price stability side of its mandate. We would say that was, if anything, a slightly hawkish shift. It’s also perhaps telling that it was the dovish Narayana Kocherlakota who dissented at this vote, whereas in previous FOMC meetings this year it is the hawks who dissented.” –Paul Ashworth, Capital Economics
“After getting knocked off its mark by recent equity market volatility, the FOMC has apparently returned to form, namely a slow but steady shift towards a more hawkish trajectory on policy. What better way, in fact, to get the equity market to rally in the face of eventually higher interest rates than to be more bullish on growth and shifting the focus of potential action from labor to now waiting for inflation. The FOMC also dropped any mention of fiscal policy being a drag on growth. Barring any unforeseen slowdowns, which the Fed never sees, we are now simply left to wait around for signals core inflation is on its way back towards 2%. Once signaled, the Fed is ready to shorten ‘considerable time’ to no time at all.” –Steve Blitz, ITG Investment Research
Here's commentary from junior gold miners on how hawkish the statement was:
