The Fed as expected kept the rates on hold but clearly the tone has moved to a less Dovish stance. Whilst outlining the key watch items that havent really changed they have noted improvement in housing and employment holding steady as well as more confident in hitting the 2% inflation target in the medium term.
"In determining whether it will be appropriate to raise the target range at its next meeting, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments."
Inflation globally is being held back for numerous reasons but energy prices is a large factor. If one believes we are at a bottom of the cycle, in fact oil surged 6% last night, then inflation could pick up quiet nicely. The US consumer based on previous economic announcements are also adding their bit by more promising consumer and retail numbers overall.
On the other side of the pacific the CPI numbers for Australia released yesterday showed a marked deterioration across all measures. This will put the rBA under more pressure to decrease rates for an economy that is struggling to shrug of the end of the mining boom - sounds like a tired record and it is but nothing has demonstrated that the economy at play is doing everything they can to improve upon this. Its not all doom and gloom but the large broking houses are now all running stories with recession in the title - whether thats will avoid or coming your way.