The Fed calls for patience on new moves on future moves. and they also remove the call for gradual rate hikes. Moreover, the Fed is now officially open to making changes to the balance sheet reduction plan. This is a decidedly dovish decision.The US Dollar is down with EUR/USD rising above 1.1460. GBP/USD is up to 1.310 and UDS/JPY is around 109.40. .
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Commodity currencies are experiencing even more substantial gains, alongside a stock market rally.
The language about interest rates is now symmetric with no commitment to raise rates.
In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.
About the balance sheet:
The Committee is prepared to adjust any of the details for completing balance sheet normalization in light of economic and financial developments
The economy is now seen as rising at a "solid" rate rather than a "strong" one. The decision was unanimous.
The Federal Reserve was expected to leave its policy unchanged in the first decision for 2019. After Fed Chair Jerome Powell and his colleagues called for patience, the focus shifted to a possible change in the balance sheet reduction program.
In the previous decision in December, Powell said that the program to withdraw liquidity from markets would continue "autopilot." Since then, he opened the door to changes, if needed. A recent report by the WSJ put the balance sheet in the limelight by saying that officials are mulling an early end to the "Quantitative Tightening" policy.
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