Optimistic Fed Signals "Strengthening" Economy, Shrugs Off Inflation As "Transitory"

They reflected some optimism, noting that economic activity and employment have strengthened.

Amid progress on vaccinations and strong policy support, indicators of economic activity and employment have strengthened.

The sectors most adversely affected by the pandemic remain weak but have shown improvement.

But couldn't help but offer some downbeat balance

The ongoing public health crisis continues to weigh on the economy, and risks to the economic outlook remain.

And most importantly, The Fed noted "inflation has risen, largely reflecting transitory factors "

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If that is not enough, here is a snap analysis courtesy of Newsquawk which notes that there were no notable changes with the Fed slightly tweaking the statement (redline at the bottom of this post) to reflect better incoming data; softens view on risks to the outlook

The Fed made small changes to its policy statement, tweaking some of the language about activity and inflation to reflect the better tone of incoming activity data, as well as inflation picking up. These changes should merely be seen as a mark-to-market, rather than any upgrade of its outlook. The Committee now characterizes economic activity as having “strengthened” (previously it noted that it had “turned up recently”); inflation meanwhile, is judged to have “risen, largely reflecting transitory factors” (previously it said inflation was continuing to run below the 2% target). In terms of the risks to the outlook, the Fed still sees “risks to the economic outlook” (previously it saw “considerable risks” to the outlook). There is no new signal on scaling back asset purchases. The FFR target range and IOER rates were both maintained, as was the current pace of asset purchases.

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So given that relative nothing-burger statement, here are some topics to listen for during the press conference (via Bloomberg):

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