On Wednesday, the greatest initial development of the Fed policy declaration focused on a change in the wording of the final sentence in the first paragraph of the Fed Declaration.
If it looks like a thin slice, this is the case.
On Wednesday, the Fed said about inflation: “Inflation remains somewhat high.”
In December, the Central Bank said: “Inflation has made progress towards the target of 2% of the committee but remains somewhat high”.
The abolition of the “progress” sentence was not well received by the markets, the shares going to session lows shortly after the publication of the declaration.
Reading here suggesting that this language change has reported a lack of confidence from the Fed that inflation will continue to decrease.
About 45 minutes later, Powell rejected this notion, referring to change as “language cleaning” rather than intention to send a signal.
In response, the actions rebounded on their stockings.
Even before this question and this answer, Wall Street’s economists argued in the sense of what Powell had.
“The markets reacted excessively to the small declaration adjustments,” wrote Samuel Tombs, American chief economist at Pantheon Macroeconomics, in an email.
“Inflation is now Simplely Described As Remaining ‘Somewhat Elevated,’ Where Previously It was Deemed to have ‘Made Progress Towards the Committee’s 2 Deputy Objective,’ But we Doubt that reflects disappment on the committee about Recent Data. The december cpi and implies that the average of the fourth quarter of basic PCE inflation will correspond to the December FOMC forecasts, 2.8%.
