Share Tool

4 Key Takeaways from the FOMC Meeting 

Kristina Hooper 

 

3/19/2014 

US Investment Strategist Kristina Hooper highlights the implications of the Fed’s decision to ditch the 6.5% unemployment rate target for raising short-term interest rates and to continue tapering asset purchases by $10 billion a month.
1
As we expected, the Federal Reserve stuck to its timeline for tapering its bond-buying program by reducing monthly purchases by another $10 billion. This makes sense given that we felt it would take a significant improvement or deterioration in economic conditions to alter the Fed’s plans. And it’s further recognition that the recent downturn was at least partially due to bad weather.
2
The FOMC scrapped the unemployment target for the fed funds rate. It’s clear that the unemployment rate is a flawed metric and doesn’t provide the bigger picture on labor-market conditions.
3
We expected the FOMC to continue to move toward more qualitative and holistic guidance on its target interest rate. With the Fed now looking at metrics such as inflation, the fed funds rate should remain low for a longer period of time. This is good news for the economy and investors.
4
The Fed’s announcement helps confirm our view that we expect monetary policy to be looser for longer. Financial repression should continue to alter the risk/reward profiles of different asset classes. As a result, investors should implement an asset-allocation strategy that reflects these conditions.
The material contains the current opinions of the author, which are subject to change without notice. Statements concerning financial market trends are based on current market conditions, which will fluctuate. References to specific securities and issuers are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities. Forecasts and estimates have certain inherent limitations, and are not intended to be relied upon as advice or interpreted as a recommendation.

 

Search

> Advanced Search

Find a Product

Or Select

Or Browse by

Contact Us

For all inquiries please contact us

Follow Us

       
Market Insights 
AGI-2014-03-19-9215 

Share

Facebook
LinkedIn
Twitter

You are currently leaving us.allianzgi.com and navigating to a third-party website. Allianz Global Investors Distributors LLC accepts no responsibility for content on third-party sites or for the services provided. When using the services provided by a third-party site, you are subject to that site’s terms of service and privacy rules, which you should review carefully.