A "Dovish" FOMC

The “Exceptional” language was maintained by the FOMC after keeping rates on hold. A dovish meeting has US yields and the dollar sliding. This FOMC's statement shows one major change from the December meeting, it now expects exceptionally low levels for FED Funds rate through late 2014. Basically, policy makers have extended their timeline by 18-months. Currently, futures prices see lower odds of an early 2014 hike, prior to the meeting it was at +20%.

The market had expected the SEP, out this afternoon, to see no tightening until 2014. This dovish report would imply that it would be late in the year. The vote was 9-1, with Lacker the one exception, refusing to give a time line.

Growth over coming quarters is seen as modest, with inflation running at levels at or below desired benchmarks. Operation twist remains in place and no fresh easing initiatives other than the ‘moving timeline'. This is clearly a dovish report allowing QE3 to remain on the table for sometime this year.