Market players and analysts don’t expect a trumpet blast from the Federal Reserve Board’s Open Market Committee (FOMC) meeting on April 29-30, anticipating that there won’t be any major changes in monetary policy. The FOMC has been tapering its quantitative easing (QE) program in swatches of $10 billion and analysts expect another cut by that amount to about $45 billion in bond buying. Markets are not expected to react much to the FOMC actions unless there is something unexpected. Several analysts emphasized there is no press conference scheduled Wednesday after the statement is released at 2 p.m. EST, which indicates the FOMC won’t be doing any heavy lifting. Some analysts are looking ahead to the June FOMC meeting as the time the committee might be more forthcoming on monetary actions.
Frank Lesh, broker and analyst with FuturePath Trading in Chicago, said there is always potential for a surprise. But he noted that since there is no news conference after the meeting, “nobody will have a chance to trip up Yellen,” a reference to what many contended was a gaff at the first meeting at which Janet Yellen presided as Fed Chairwoman. Lesh said the $10 billion reduction in bond tapering will continue because the Fed wants to “get out of this (QE) business”. He said the FOMC might acknowledge that there was some weakness in January and February because of weather, but will likely note that there is pickup in March and April.
Market participants still are trying to figure out when interest rates might begin to rise, so they will be looking for any forward guidance in the statement. Although it’s obvious no hike will occur until after tapering ends, the question is how long after. The Fed has said in its minutes that it seems there is a need for more clarification on forward guidance. Lesh said he didn’t expect them to give any significant glimpse of forward guidance in this statement. Although there is no news conference on Wednesday after the FOMC meeting, several analysts emphasized that Chairwoman Yellen will hold a news conference on Thursday. They hope for more indications then on how the Fed sees the economy — which could provide at least a glimpse into the tapering schedule and an eventual interest rate rise. Before the FOMC statement, U.S. advance estimate of GDP for the first three months of 2014 will be released. A consensus view in The Wall Street Journal’s April survey of economists believes there will be a 1.5% annualized gain, according to published reports.