CIBC Research discusses its reaction to today's FOMC policy decision.
"The Fed tried to tell markets to take a chill pill, improving their outlook for the US economy, while avoiding scaring bond investors by downplaying the usual hawkish consequences of that economic upgrade. There’s no change in rates or bond purchases, of course. The Fed had to acknowledge that large scale fiscal stimulus will raise the growth profile, with its call for year on year growth by Q4 raised to 6.5%, a touch above our forecast, but sees growth slowing next year to 3.3% and 2.2% in 2023, despite stimulus from near zero rates over that whole period," CIBC notes.
"In sum, the Fed is telling us that the outlook is better, but don’t worry your little heads too much about rate hikes ahead. Although, by saying conditions are still accommodative, it suggests it’s not that concerned with increases in bond yields thus far," CIBC adds.