Consistent with market expectations, the Federal Open Market Committee (the FOMC) left the Fed Funds rate unchanged, at 0.25%‐0.50%. The accompanying statement was in‐line with our and the market’s expectations.
The FOMC decided the best approach was to do as little as possible and use the next few months to assess the domestic and global economic and financial landscape. Without a press conference and in light of the recent EU referendum, the prudent approach was for the FOMC to simply conduct a mark-to‐market of their June statement. Provided the data remains stable, Fed members, particularly the Chair will have ample opportunities to prepare the market for a rate hike later this year such as the July FOMC minutes and Yellen’s address at Jackson Hole at the end of August.
We can break the Committee’s statement into three parts:
Finally, one member of the committee, Esther George (President of the Kansas City Federal Reserve Bank) dissented in favor of a rate hike at this meeting. This is not the first time Ms. George has dissented from the broad group. However, she was a bit more cautious at the prior meeting and voted with the consensus.