Following the Fed’s announcement, please see below for market views from the Global Fixed Income, Currency & Commodities Team (GFICC):
Consistent with our and the market’s expectations, the Federal Open Market Committee (FOMC) kept the Fed Funds rate target range unchanged at 2.00%‐2.25%.
The November FOMC statement had very limited changes compared to September. The existing language in the statement was mostly maintained and continues to reflect the solid economic backdrop in the US, the roughly balanced risks to the outlook and the appropriateness of a gradual rate hiking strategy. The statement did not reference the balance sheet normalization process but the decline in the Fed’s asset holdings will continue in the background at the max run-down rate (30bln Treasuries / 20bln MBS). The MBS cap is unlikely to be exceeded in any given month due to current expectations around pre-payment speeds thus meaning the involvement of the Fed in this market going forward will be more limited.
This is the last FOMC meeting to not be followed by a press conference. Starting in 2019, all FOMC meetings (rather than only the quarterly meeting coinciding with the Summary of Economic Projections) will be followed by a press conference.
We can break the statement into two parts:
There were no dissenters. Mary Daly, the new president of the San Francisco Fed (who replaced John C Williams: the new NY Fed President) joined the committee and replaced Esther George as a voting member.