The first two paragraphs of the FOMC statement were a copy and paste from the September meeting. The big change though came in the following paragraph when the Fed discussed the factors that would influence policy from here: “In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.” That is quite an expansion and refinement in language from the 4th paragraph in September, that they repeated again today, when all they said was “the committee will continue to monitor the implications of incoming information for the economic outlook.”
Bottom line, the front loading is essentially over and rate hikes from here will be more cognizant of the new economic environment we’re in with respect to the much higher cost of capital and economic clouds that are circling. This is the Fed’s way of telling us that a slowdown in the pace of future hikes is upon us.
The 2 yr yield went from 4.55% to 4.46% right after while the 10 yr yield is off 3 bps from where it was just prior to the statement release. The US dollar is at the lows of the day with gold at the highs.