Analysis of FOMC statement and dot plot implications (with Scarlet, Michael McKee)

Clarida is not surprised Warsh didn't submit a dot, but is surprised by the hawkish tilt with nine participants projecting a rate hike. He attributes this to a broad-based markup in core inflation projections, not just energy pass-through. He notes the removal of the employment mandate language is an important change, but doesn't think they're abandoning it. He wants to hear Warsh flesh out the dual mandate and balance sheet plans.

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Former Federal Reserve Vice Chair 8.5
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Rich Clarida 8.5

Analysis of FOMC statement and dot plot implications (with Scarlet, Michael McKee)

yields

Clarida acknowledges the market is taking the information as hawkish, which implies higher yields.

Rich Clarida

I'm not surprised Warsh didn't submit a dot, but the news that nine participants wrote down a rate hike was above what I was thinking going into this meeting.
Rich Clarida

The big markup in core inflation projections relative to March suggests the pressure is not just a pass-through from energy prices, but appears more broadly based.
Rich Clarida

The removal of the employment mandate language is an important change to the statement, but I wouldn't read into it that they're abandoning the dual mandate. We're at or close to maximum employment.
Rich Clarida

There is nothing dovish in the statement at first glance. The sentence 'the committee will deliver price stability' sounds like where Warsh is going to land.
Rich Clarida

I want to hear Warsh flesh out how the dual mandate fits in, and how he plans to change minds on the committee about the balance sheet size, given he spent 15 years criticizing the Fed's big balance sheet.
Rich Clarida

My question for Warsh: 'Kevin, you did not submit a dot today. There's no forward guidance in the statement. The markets are taking the information today as hawkish. Would you be prepared to comment?'

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