The FOMC’s updated economic and rate projections show that officials expect to leave the fed funds rate at near-zero until at least 2023 and probably well beyond that. With the five-year Treasury yield already at less than 0.2%, however, those projections were already largely priced into the market. In the statement released after today’s policy meeting, the FOMC updated the language to bring it into line with its recent adoption of a flexible average inflation target. But those changes were a little more hawkish than we had expected, and the Fed offered no hints that it would be willing to back up its new policy framework with an imminent expansion of its large-scale asset purchases.
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