Janet Yellen and the Federal Reserve’s Federal Open Market Committee (FOMC) have not made any change in interest rates. Again. While that no-change was expected, there just wasn’t really any serious rate hike scare in the statement beyond a strong labor market. It is almost as if Yellen and the Fed are keeping the door open to not starting the interest rate hike cycle until after 2015 or at least very late in the year rather than the September/October timeline.

One more hawkish tone came around the current employment situation having improved. Still, the overall tone remains very dovish. in fact, the vote was 10 to 0 to keep the Fed Funds at the never-ending 0.00% to 0.25% target.

Also, the first formal rate hike is expected to only go to 0.25% — not even up to 0.50%. Now investors have to stomach there not being a press conference after this FOMC statement, so no secret comments from body language or Fed-speak verbiage will be up for interpretation.

The Fed statement indicated that economic activity has been expanding moderately in recent months: household spending has been moderate; additional improvement in the housing sector; labor market continued to improve; solid job gains and declining unemployment; underutilization of labor resources has diminished. It also points out that business fixed investment and net exports stayed soft.

Also, the inflation continued to run under the Fed’s longer-run objective, due to low energy and while compensation gains remain low. Additional notes were as follows:

• Continues to see the risks to the outlook for economic activity and the labor market as nearly balanced.
• Current 0 to 1/4 percent target range for the federal funds rate remains appropriate.
• Anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.
• Maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction… should help maintain accommodative financial conditions.

Yellen and Team fed are also keeping the brakes on by tempering just how high the rates should go. The statement concluded:

When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.

So, does this sound very hawkish?

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