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"The fact that we've reached a 'phase one' deal with China, and the fact that we've moved ahead closer to getting USMCA agreed ... those are potentially positive things for the economy. Without question. The reaction of financial markets is very consistent with that perception. A sustained reduction in uncertainty over time should improve business sentiment and investment, which would provide some additional support for the economy. It's important, though too, to bear in mind a couple things. First, trade policy uncertainty remains elevated: Businesses continue to identify it as an ongoing risk. We still have two or even three active trade discussions that are going on in the public square right now. So it hasn't gone away." - Franck
"It's a very serious issue and I want to start by acknowledging the significant and considerable human suffering that the virus is already causing. There is likely to be some disruption to activity in China and possibly globally based on the spread of the virus to date and the travel restrictions and business closures that have already been imposed. Of course the situation is really in its early stages and its very uncertain about how much it will spread and what the macroeconomic effects would be in China and its immediate trading partners and neighbors and around the world. In light of that uncertainty I'm not going to speculate about it at this point...We are very carefully minoring the situation...our framework, ultimately, is what are the potential ramifications for the U.S. economy and for the achievement of our duel mandate." -Fitzgerald
"It's a bit surprising that with sustained levels of historically low unemployment, we haven't seen wages moving up above that level as we have in other long expansions and other periods of low unemployment." -Sheetz
"Labor market continues to perform well ... we see strong job creation, we see low unemployment, very importantly we see labor force participation continuing to move up." -Sheetz
Powell to question asked by CNBC's Steve Liesman:
"In terms of what affects markets, I think many things affect markets. It's very hard to say with any precision at any time what is affecting markets. What I can tell you is that you know what our intention is: It is to return reserve to an ample level. We expect that to happen during the second quarter and our plan, as we do that, is as those purchases get to that level we believe we can gradually reduce them and we believe we can also gradually reduce repo as we reach an ample level." -Franck
Powell: "Over the first half of this year we intend to adjust the size and pricing of repo operations as we transition away from their active use in supplying reserves. This process will take place gradually...we expect to continue offering repos at least through April." - Sheetz
"Some of the uncertainties around trade have diminished recently and there are some signs that global growth may be stabilizing after declining since mid-2018," Powell said. "Nonetheless, uncertainties about the outlook remain, including those posed by the new coronavirus." - Franck
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The Fed also refrained in its statement from commenting on the illness than began in Wuhan, China, but investors awaited Chair Powell's press conference at 2:30 pm ET for color on what the central bank is monitoring with respect to the disease.
The Federal Reserve's foray into the repo market will continue through at least April. Following its two-day meeting Wednesday, the central bank said its efforts to stabilize the market where banks get their short-term financing will extend at least another three months. The Fed in December said it would continue repo through January. — Cox
The decision was "nothing" says John Briggs of NatWest about the Fed's statement. "You're going to have to wait for the press conference and questions about bills QE."
Peter Boockvar, chief investment officer at Bleakley Advisory Group, says the statement was "about identical to the one issued in December."
"Bottom line, the Fed's balance sheet expansion seems on auto pilot thru at least April as stated and we'll see what offset maturing MBS and repo will be. The Treasury market didn't respond," he added.
The Fed downgraded its categorization of American household spending to "moderate" from its previous "strong" and continued to cast business fixed investment and exports as "weak."
Though the Fed kept its benchmark rate steady, it did tweak interest it pays on funds stored at the central bank. It boosted the interest on excess reserves rate 5 basis points to 1.6% in what officials categorized as a mostly technical move.
Fed members voted to leave interest rates unchanged, a move widely expected by investors and economists across Wall Street.
"The Committee judges that the current stance of monetary policy is appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation returning to the Committee's symmetric 2 percent objective," the Fed's statement read.
Wall Street expects the Fed to leave its key responsibility — interest rates — unchanged at its first regular meeting of 2020. The central bank, which tries to maximize U.S. employment and keep prices throughout the economy tame, has made it clear in prior meetings that it won't adjust borrowing costs unless it sees a meaningful and sustained uptick in inflation. Chairman Jerome Powell will answer questions from journalists at 2:30 pm ET. Powell, in perhaps the most interesting part of the Fed's comments today, could be asked to comment on topics ranging from the coronavirus to the size of the Fed's balance sheet.
Markets were calm heading into the decision with the Dow up 0.5% (155 points) and the S&P 500 adding about 0.4%. The 10-year Treasury note yield held above multimonth lows around 1.617%.