As anyone who was paying a modicum of attention could easily tell you, the Federal Reserve was never going to make any changes to monetary policy at today’s meeting. Instead, traders were tuning in to see any changes to the central bank’s statement and extrapolate what that may mean for interest rates moving forward.

Even relative to those low expectations, the Federal Reserve’s statement still failed to generate any noteworthy headlines. The “changes” to the statement, such as they were, can be seen below:

• Economic activity rising at a “strong” rate (upgraded from “solid”)
• Unemployment rate has “stayed low” (updated from “declined”)
• Household spending and business fixed investment “have grown” strongly (updated from “picked up” and “has continued to grow”
• Inflation “remains near” 2 percent (updated from “moved close to”)

…And that’s it for an update. Some analysts have argued that, at the margin, the upgrade to the central bank’s assessment economic activity makes it more likely that Chairman Powell and company will raise interest rates next month, but there is very little in the way of new information no matter how you look at it. Accordingly, Fed Funds futures traders are nonplussed, with the market currently pricing in a 91% chance of an interest rate increase in September and a 64% probability of another rate hike in December, roughly in-line with yesterday’s levels.

Market Reaction

As you might expect for the most hum-drum of FOMC meetings, the impact across markets has been limited. We’ve seen token selling in the US dollar, with the greenback dipping by 5-10 pips against its most of its major rivals and essentially no change in broad market indices from pre-release levels. The yield on the benchmark 10-year Treasury bond continues to hover around the 2.99-3.00% range as we go to press.

Needless to say, we expect much more volatility from the week’s remaining top-tier economic events, tomorrow’s Bank of England announcement and Friday’s Non-Farm Payroll report.