To be filed under “events notably lacking in eventfulness”.
Any interesting revelations from tomorrow’s FOMC meeting probably won’t come in the statement; we’ll have to wait for the minutes (to be released April 3rd) to know if there was further chatter about more QE, sterilised or otherwise.
It’s not actually clear whether this will even come up tomorrow or whether the participants will decide to wait until the two-day April meeting, but either way we won’t know for a few weeks.
(By the way, our colleague Robin Harding has a post up at Money Supply reporting that sterilised QE is not seriously being considered by the Fed. Damn it Robin, we spilt a lot of pixels last week trying to think through the potential implications of this!)
All that said, it’s likely that the language in the statement will be changed to account for the recent labour market improvement and higher oil and gas prices. Everyone is now trying to figure out whether recent employment gains can continue given other, less impressive economic data — see here and here for more on this — and perhaps the statement will provide some clues on recent developments in the Fed’s thinking about this, though we doubt it.
Ben Bernanke, Fed chairman, already explained his own reluctance to prematurely draw conclusions from the latest batch of employment figures in testimony to Congress a couple of weeks ago, and has emphasised that he believes the inflationary pressures coming from oil are likely to be temporary. We doubt there will be any deviation from this position.
Here’s a short excerpt from a Deutsche Bank note, which makes sense to us and is similar to other notes we’ve seen:
In general, we expect the tone of the statement to grudgingly acknowledge the improvement in the economic data, particularly the labor data, but the dovish-leaning FOMC will be inclined to reserve judgment until more information is available. In this regard, the March jobs report takes on heighted significance, because this will be the last report ahead of the two-day April FOMC meeting—when policymakers are expected to cast a verdict on possible extension or augmentation of Operation Twist, which expires in late June.
Sterilisation not the focus at the FOMC – FT Money Supply