The July FOMC statement had a few changes, but failed to suggest the Fed is going to clearly start tapering. There were two, maybe, three important changes.
1) Growth was called modest as opposed to moderate in June. This seems to be a parsing of words but could hint at marginally slower growth conditions.
2) The Fed noted that mortgage rates had risen. Higher mortgage rates along with fiscal policy restraint were seen as headwinds. In June, fiscal policy restrain was only noted.
3) The Fed said: The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance…". The Fed does see inflation moving toward its goal over the medium term like June, but added the risk to the July statement. The Fed seems to be suggesting that below target inflation should be a factor in the tapering outlook.
Here are my RTI Questions:
1) Do you think the Fed's statement is more dovish than June?
2) When do you think the Fed will taper - September seems less likely given the statements or does it?
3) With the FOMC minutes behind and the labor market expanding, will stocks be able to post a solid gain in August?