[Fredslist] Summary of Yesterday's Fed Meeting

[Dichter, Dan [PVTC]]

*	Make it 15 for 15 - the FOMC raised short-term rates another
25bp at the conclusion of yesterday's meeting.  The Fed funds target now
stands at 4.75%.
*	The economic paragraph needed a little updating and got it.
*	The policy paragraph needed no updating and didn't get it.

Looking for something different in a Fed Chairman?  Hope you weren't
looking for it in the FOMC press release following the March 27-28
meeting.  The Committee did raise short-term interest rates another 25
basis points for the 15th consecutive get-together; the target for the
Fed funds rate now stands at 4.75%.  But the press release "author"
appears to have weathered the change in Chairmanship - while the
so-called "economic" section of the press release was updated, the
"policy" sector wasn't changed at all.  Three quick points:

*	The Committee excused weak fourth quarter growth to "temporary
or special factors" and acknowledged that the current quarter's strength
(we have real GDP rising 4.5%-5%) is unsustainable.  They noted that "as
yet, the run-up in energy and other commodities appears to have had only
a modest effect on core inflation, ongoing productivity gains have
helped to hold the growth of unit labor costs in check and inflation
expectations remained contained."  Actually, core inflation has
moderated just a bit over the past six-to-twelve months.
*	The policy paragraph was untouched.  Last meeting, the market
seemed to interpret this as meaning that there was one, possibly two
additional 25 bp increases on tap.  This may be interpreted in the same
way but keep in mind that the Fed need not follow through with this
interpretation if the data suggest otherwise.  It's our forecast that we
will see another 25 bp hike in short-term rates at the May 10th meeting
although by the June 28-29 meeting, the Fed could find reason in the
data to pause, at least temporarily.
*	The FOMC monetary policy decision was unanimous.

As always, please don't hesitate to contact me with any questions or
needs.

Regards,
Dan

_______________________________________
Daniel G. Dichter
Second Vice President - Wealth Management
Smith Barney | Citigroup Global Markets, Inc.
31 West 52nd Street, 23rd Floor
New York, NY 10019
p. (212) 603-6178
f.  (212) 307-3863
dan.dichter at smithbarney.com



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