On the March FOMC
Markets reacted to today’s FOMC as though it were a dovish surprise. Perhaps it was Kashkari’s dovish dissent, the first since 2014. As a possible successor to Yellen, he may be reflecting informed belief that Trump wishes to appoint a dove next year. The longer run “dots” didn’t move at all, reflecting no upgrade in the FOMC’s estimate of its key benchmark, the neutral rate of interest. This keeps the path of hikes on a gradual and cautious trajectory.