FOMC December 2014 Press Conference Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

This isn’t new guidance, but it is new guidance

“This new language does not represent a change in our policy intentions and is fully consistent with our previous guidance…[but] the Committee judged that some modification to our guidance is appropriate at this time.”

Oil will effect inflation

“sizable declines in oil prices will likely hold down overall inflation in the near term. But as the effects of these oil price declines and other transitory factors dissipate, and as resource utilization continues to rise, the Committee expects inflation to move gradually back toward its objective.”

This is not a change in policy

“Today’s statement, which indicates that the Committee judges that it can be patient in beginning to normalize the stance of monetary policy, does not signify any change in the Committee’s policy intentions as set forth in its recent statements.”

We changed our guidance because the asset purchase program is over

“The reason is that with the asset purchase program having been wound down in
October, it seemed less helpful to continue to communicate about the possible timing of our first rate increase with reference to an event that is receding into the past. Instead, we have shifted to language that better reflects the Committee’s focus on the economic conditions that would make lift off appropriate.”

No normalization for at least the next couple of meetings

“the Committee considers it unlikely to begin the normalization process
for at least the next couple of meetings.”

10 years after the financial crisis, finally back to normal maybe

“most participants expect the federal funds rate to move close to its longer-run normal level by the end of 2017”

We don’t have to wait for a scheduled press conference to make a policy move

“I would really like to strongly discourage the expectation that policy moves can only occur when there’s a scheduled press conference…”

We view the decline in oil prices as a net positive

“The very substantial decline we have seen in oil prices is one of the most important developments shaping the global outlook. It will have different effects in different regions, and could well have effects on financial markets, as we are seeing. I think the judgment of the committee is that from the standpoint of the United States and the U.S. outlook, that the decline we have seen in oil prices is likely to be on net; a positive. It’s something that’s certainly good for families, for households. It’s putting more money in their pockets. Having to spend less on gas and energy, and so in that sense, it’s like a tax cut that boosts their spending power.”

Rates have been at zero for 6 years now

“you know, the federal funds rate has been sitting in the zero to a quarter percent range now for six years. This is — and we have a very large balance sheet. We are providing a very highly accommodative monetary policy. And even as we begin to normalize the stance of monetary policy when that becomes appropriate, it’s important to remember that monetary policy will still be very accommodative for a long time”

We probably will not repeat a “measured pace” approach to rate increases

“There certainly has been no decision, you know, decision on the part of the Committee to move at a measured pace or to use language like that. I think quite a few people looking back on the use of that language in the–I can’t remember if it was 12 or 16 meetings, where there were 25 basis point moves. We’d probably not like to repeat a sequence in which there was a measured pace and 25 basis point moves at every meeting. So I certainly don’t want to encourage you to think that there will be a repeat of that.”