Even for the MAC Desk, which eagerly awaits every FOMC policy decision, this meeting has generated very little buzz. To set the stage, since the last Fed meeting in December the economic backdrop has remained status quo with the labor market in a low hire/low fire environment and inflation sticky above the Fed’s target. There are some differing opinions on the Committee, but most seem content with the current policy stance and will allow the data to guide further action. That backdrop along with the fact that data collection in the aftermath of the government shutdown (or lack thereof) muddied the waters a bit - pushed out market expectations for further action to mid-year.

As widely expected, the Federal Reserve left rates unchanged, but the Statement evolved in a hawkish direction. The description of economic activity was upgraded to “solid” from moderate. The Committee tweaked language related to the employment backdrop acknowledging the lower hiring environment once again but saying the unemployment rate had “stabilized”. Inflation language was unchanged. The Committee suggested that the balance of risks had shifted back towards equilibrium from tilted to downside risk to employment. Miran dissented on the vote, as expected, but only called for a 25bp cut, versus the 50bp cuts he has preferred since taking the role. He was joined by Waller, who also wanted a 25bp cut. Waller previously dissented in July when the FOMC held rates, favoring a 25bp cut along with Bowman. His odds to be nominated as the next Fed Chair nominee did jump after the statement was released but he remains firmly behind Rieder and Warsh.