Mar 20, 2015
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One of the most important reports on the U.S. and the global economy came from Federal Express, the No. 2 package shipper here in the U.S. Bolstered by falling fuel costs, FDX reported a whopping 63% gain in operating profits. Sales revenue, an overall economic indicator, grew by 3.5% with freight revenue rising by 6%. The FDX head of market development said that this year’s working forecast was growth of 3.1% for the U.S. GDP and global growth, just 2.8%. What it means for investors? Steady growth predicted? What the Fed Said: Low Inflation? Steady Growth? Slow Fed Funds increases to .625% by year end?
Transcript of Chair Yellen’s FOMC Press Conference March 18, 2015 Fed Funds. CHAIR YELLEN. Good afternoon. As you know, the Federal Open Market Committee this afternoon reaffirmed the current 0 to 1/4 percent target range for the federal funds rate. We also updated our forward guidance, indicating that an increase in the target range for the federal funds rate remains unlikely at our next meeting in April. With continued improvement in economic conditions, however, we do not want to rule out the possibility that an increase in the target range could be warranted at subsequent meetings. Let me emphasize, however, that the timing of the initial increase in the target range will depend on the Committee’s assessment of incoming information. Today’s modification of our guidance should not be interpreted to mean that we have decided on the timing of that increase. In other words, just because we removed the word “patient” from the statement doesn’t mean we are going to be impatient. Moreover, even after the initial increase in the target funds rate, our policy is likely to remain highly accommodative to support continued progress toward our objectives of maximum employment and 2 percent inflation. I will come back to today’s policy decisions in a few moments, but first I would like to review economic developments and the outlook, which formed the basis for our policy decisions. Steady Growth? We continue to expect sufficient underlying strength in economic growth to support ongoing improvement in the labor market. After averaging about 2-1/2 percent over 2014, growth of real gross domestic product appears to have slowed in the first quarter of this year, in part reflecting a moderation in household spending. In addition, the recovery in the housing sector remains subdued and export growth looks to have weakened. Looking ahead, however, the Committee continues to expect a moderate pace of GDP growth, with robust job gains and lower energy prices supporting household spending. Low Inflation? Inflation has declined further below our longer-run objective, largely reflecting the lower energy prices I just mentioned. Declining import prices have also restrained inflation and, in light of the recent appreciation of the dollar, will likely continue to do so in the months ahead. My colleagues and I continue to expect that as the effects of these transitory factors dissipate and as the labor market improves further, inflation will move gradually back toward our 2 percent objective over the medium term. In making this forecast, we are attentive to the low levels of market-based measures of inflation compensation. In contrast, survey-based measures of longerterm inflation expectations have remained stable. The Committee will continue to monitor inflation developments carefully.
Advance release of table 1 of the Summary of Economic Projections to be released with the FOMC minutes Economic Projections of Federal Reserve Board Members and Federal Reserve Bank Presidents, March 2015
- Board of Governors of the Federal Reserve System
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Bloomberg USD High Yield Corp Bond Index (BUHYEN) - Energy- Graph courtesy of Bloomberg L.P.
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