Thread by @JustinWolfers

Fed statement (here: federalreserve.gov/newsevents/pre…) is pretty much exactly what everyone expected: No rate rise today, but we think it will "soon be appropriate" to raise rates, and bond purchases end in March.

Worth noting that the decision (which really, for now, is a decision to do nothing) was unanimous.

It's still covid's economy, and the rest of us are just spectators...

The Fed also announced principles for balance sheet reduction (ie the end of quantitative easing). No surprises here, either. federalreserve.gov/newsevents/pre…

All told, it's a pretty well signaled and orchestrated shift that will ruffle few feathers.

A key point that I see many miss: It's not at all obvious that the Fed is tightening monetary policy. Inflation has risen, which has effectively cut the interest rate that matters--the real interest rate. At this stage the Fed is leaning against this mechanical cut in real rates.

If there's any real news in today's Fed announcement, it's what the Fed didn't do. It didn't raise rates faster than it had earlier signaled.

Also, it's going to be a weird couple of months as we're soon to see the first data on the awful state of the Omicron-afflicted real economy, even as inflation has ticked up. (For crying out loud, please don't give Omicron the compliment of calling it stagflation. It's a virus.)

Here's what a Fed Chair would love to hear at a highly-contested inflection point like this: Yawn.

...As far as I can tell, that's the main reaction so far.

I normally love the Fed Statement Tracker, as it highlights the few edits made between meetings. But this time, it looks like they started from a blank sheet of paper. Like none of the words survived: graphics.wsj.com/fed-statement-…

It looks like you could say that stocks rose and fell after the Fed announcement. Or they stayed the same. Depends on your event window, really.

Fun fact: I accidentally clicked on the Fed's January *2021* statement, and the central concern at the time was that inflation was too low.

Point is, a year is a long time, and the future is hard to predict, particularly during a pandemic.