As nearly all Fed watchers expected, the FOMC policy decision today was a dud. No new action. However, we would like to point out the most important passage in the statement supporting the “central bank put” thesis outlined in several Assist FX notes.

According to the Fed, inflation is still below target and accommodative policy is needed. Even with a 25 bp rate hike in December, the FOMC will remain behind the curve and short-term real interest rates will remain negative. The risk of rapid rate hikes is not something even close to being on the Fed’s radar.

Here is the key passage directly from the Federal Reserve’s website:

110117 fomc statement key