Stocks rallied and Treasury yields declined as Janet Yellen maintained a dovish outlook in her press conference, emphasizing that even if the Fed raises rates it will be "gradual."
The Fed statement was almost a carbon copy of the April 29 statement. The only change came in the first paragraph on the economic outlook.
The Fed has:
1) modestly upgraded the economic outlook: "has been been expanding moderately after having changed little during the first quarter."
2) modestly upgraded the assessment of the labor market: "The pace of job gains picked up while the unemployment rate remained steady."
3) upgraded its view on housing: "Growth in household spending has been moderate and the housing sector has shown some improvement"
4) left in the key inflation line: "The Committee continues to monitor inflation developments closely."
5) left in the key statement on fed funds rate: "economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run."
6) downgraded their 2015 GDP forecast to 1.8-2 percent from 2.3-2.7 percent in March.