This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Fed Statement Sows Confusion With Projections All Over the Place

NEW YORK (TheStreet) --It's enough to make you feel Harry Truman's pain.

The Federal Reserve did the cause of clarity no favors today. The central bank's Open Market Committee cut ts 2014 growth forecast Wednesday, modestly pushed back its view of when the first increase in interest rates might come.

Yet, the Fed made several changes in the statement it publishes after each meeting on monetary policy -- all of them pointing to a faster pickup, saying economic growth "has rebounded," business investment "resumed its advance" and labor markets "generally showed further improvement.''

"Bring me a one-handed economist," Truman is said to have exclaimed, demanding one who would never say "on the other hand."

Amen, Harry.

If anything, the Fed's stance points to more dovishness for longer -- but only a little.

The big move is the cut in this year's growth forecast, which fell to 2.1% to 2.3% from a range of 2.8% to 3% the Fed released in March. That reflects the drop in output during the cold winter this year. For the markets the Fed is implying that in early 2015 the recovery will still look uncertain enough that few policy makers will want to experiment with tightening very much.

Waiting until mid-2015 to get a few strong quarters in a row, which looks more likely after the early-2014 mess, means any move to begin boosting rates in 2015 will come toward the end of the year.

The new survey of committee participants backs that up.

Twelve of the 16 FOMC participants think rates should begin to rise next year, down from 13 when the committee's last set of projections were released in March. Three think the first hike should come in 2016, up from two in March. This is the so-called dot-plot that created what little hoop-la there was heading into this meeting.

As expected, the Fed cut its monthly bond purchases to $35 billion from $45 billion as its most-active program to push interest rates lower winds down.

That may well be because the Fed's newest members -- including Vice Chair Stanley Fischer -- are more dovish at the margin than people they replaced. Fed Chair Janet Yellen suggested as much at her press conference.

There's no doubt the economy is at a hard-to-read inflection point, made much harder by consumers' reluctance to spend as freely on housing as on cars and other durable goods.

But the Fed could have given the market a clearer picture. If the economy is weak enough to lower growth forecasts, why muddy the water by talking about how well things are doing compared to three months ago?

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

>>Federal Reserve Continues Down Road to End Stimulus

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7890 -13.6380 -0.30%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs