From the Board of Governors of the Federal Reserve System, press release, 3/18/15:
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate. The Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced. Inflation is anticipated to remain near its recent low level in the near term, but the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of energy price declines and other factors dissipate. The Committee continues to monitor inflation developments closely.
To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress–both realized and expected–toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. Consistent with its previous statement, the Committee judges that an increase in the target range for the federal funds rate remains unlikely at the April FOMC meeting. The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term. This change in the forward guidance does not indicate that the Committee has decided on the timing of the initial increase in the target range.
http://www.federalreserve.gov/newsevents/press/monetary/20150318a.htm
This is not the full text of the press release. These two paragraphs were chosen to demonstrate a masterful use of 313 words to say nothing. The economy is not getting better, but it’s not getting worse, but if it is getting worse it will get better. The federal funds rate target is just right now, but how long it will stay just right is dependent on five broadly defined variables. It will probably stay just right through the April Federal Open Market Committee meeting. If inflation moves back to 2 percent and the Department of Labor keeps spitting out good unemployment statistics, the target range will be raised, but no word on when that might be.
This, then, is the culmination of the move over the last few years to make the Fed more transparent and open. There is nothing transparent about this release, because it says nothing. The stock market went wild because the release infinitesimally appeared to lower the chances the federal funds rate target will be raised all of 25 basis points, a quarter of a percent, in June. On such slender threads do financial markets hang. SLL has said it before and will say it again: when the only thing the stock market has going for it is cheap financing from the central bank, that’s a market to shun.
