On the September FOMC

Gone is the language that policy is accommodative -- this matches the facts, and was well anticipated, as was today's rate hike. There was no substantial change in the "dot plots," except that they weakened in the out-years, and despite the present improvement in growth and inflation, there was no upgrade to the average "longer-run" equilibrium funds rate – suggesting no improvement in hopes for an end to "secular stagnation." Today's rate hike, and the three anticipated next year, will only be indexations to anticipated growth -- not policy tightenings. Powell highlighted the supply-side effects of the corporate tax cuts, but relegated them to an uncertain future. Powell is watching the yield curve, and looking to the 10-year to ratify and give permission for further hikes. We see nothing hawkish in today's FOMC, and expect growth, inflation and the 10-year yield to continue to improve.