NEW YORK (Reuters) - The Federal Reserve on Wednesday repeated its promise to leave interest rates on hold until at least late 2014 but offered few clues into whether it might offer additional stimulus later this year.
COMMENTS:
GENNADIY GOLDBERG, INTERST RATE STRATEGIST, 4CAST LTD, NEW YORK
"It looks like they left the second half of the statement fairly unchanged, the part dealing with the rates and Operation Twist etc. The market rallied into the statement. The statement should have read a little more hawkish, which is fairly consistent with the previous FOMC statement. The big focus is on the projections and Bernanke."
WILMER STITH, PORTOLIO MANAGER, WILMINGTON TRUST BROAD MARKET FUND, WILMINGTON TRUST INVESTMENT ADVISORS
"The takeaway is QE3 is probably not on the table. I think the market was bidding for a mention of QE3 or a mention of what will happen at the end of Operation Twist at the end of June. But when you read their comments about growth staying in this vicinity and inflation elevated because of energy, those two statements argue for no additional quantitative easing at this point.
"But since everything is so tenuous, with growth at 2 percent GDP, if you have a slowdown in employment there's not much wiggle room. Then QE3 might be on the table. But they didn't intimate something about the last three weeks so we're back to the point of not having a QE3. The beneficiaries of the chance of a QE3 would have been the longer end of the Treasury market, TIPs, and more risky fixed-income assets and certain types of mortgages. All of those more volatile types of sectors are somewhat disappointed by this statement."
DAVID ADER, HEAD OF GOVERNMENT BOND STRATEGY, CRT CAPITAL, STAMFORD, CONNECTICUT
"There's not a lot of new information here. They certainly do acknowledge inflation has picked up but in same breath effectively say that 1) longer term expectations remain stable, and 2) that higher prices reflect crude and gasoline, and 3) that these will impact inflation 'only temporarily'. We see this as saying they are not worried, full stop, and are prepared to look past these pressures."
DAVID GILMORE, PARTNER, FOREIGN EXCHANGE ANALYTICS, ESSEX, CONNECTICUT
"I definitely think he's trying to fly low under the radar and stay out of the crosshairs of leaders in Congress (by not hinting at more QE). That said, I think we still see a huge drag from the euro zone, the BRICs are starting to slow more, and there is not a lot in the pipeline to support Main Street, so ultimately the Fed will have to address that."
TOM PORCELLI, CHIEF U.S. ECONOMIST, RBC CAPITAL MARKETS, NEW YORK
"I would say it is probably a touch more dovish than the last statement. It does not seem to have much of a change from the last statement. Full focus is on the afternoon press conference and economic outlook."
BOB GELFOND, CHIEF EXECUTIVE OF MQS ASSET MANAGEMENT IN NEW YORK
"Doesn't seem like anything new or surprising. There's not too much that's noteworthy in it. Everything is status quo so far as I can tell. The Fed won't make any moves to tighten unless you see really strong numbers over several quarters and we're certainly not there yet."
JOHN DOYLE, CURRENCY STRATEGIST, TEMPUS CONSULTING, WASHINGTON, D.C.
"Obviously the decision was status quo and I think that's going to be unlikely to drive the dollar out of the tight range we've seen recently. However, the quote about the economy picking up gradually might show a little more of a bullish sentiment at the 2 o'clock release of the growth forecast. We might see the dollar gain a little bit on that as it might lessen the likelihood of QE3. I think overall it's almost a non-event and the fact is there's nothing really out of the ordinary, and I think traders are going to shift their attention to 2:15 and any verbiage change from Mr. Bernanke."
MARKET REACTION
STOCKS: U.S. stocks hold gains.
BONDS: U.S. Treasury debt prices turn slightly negative.
FOREX: Dollar gains versus yen, pares losses versus euro.
(Americas Economics and Markets Desk; +1-646 223-6300)