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Opinion
Jason Schenker

This Fed Is a Dove in Hawk's Clothing

The central bank's actions are ultimately dollar bearish, gold bullish and supportive of equities.
Fed doves take flight.

Fed doves take flight.

As the dust settles from the Federal Reserve’s decision to raise interest rates, it’s important to look through the short-term volatility to see some of the broader market implications. Despite the market reaction, the Fed’s actions are dollar bearish, gold bullish and supportive of equities -- especially given the dovish turn in Federal Open Market Committee member forecasts of future rates. Yes, dovish.

The weak consumer price index report released just hours before the Fed acted Wednesday means the central bank shouldn’t be under pressure to increase rates. Even as policy makers raised the target federal funds rate by 25 basis points -- something that is usually seen as fundamentally dollar bullish -- the mean estimate for the rate for 2017, 2018 and 2019 all fell even though the median forecasts appeared virtually unchanged. The mean forecasts, rather than the median forecasts, are the numbers to watch because they better reflect changes in the distribution of FOMC member policy expectations.