Kinds of words, all manner of words, that paid sure of a healthier economy that paint of a healthier economy, words like solid, strong, and strengthening. Still absent in the statement is a reference to balanced risks. As you know, there was much focused on this heading into the meeting, and again, the balanced seen since theen december statement. There are plenty of to be sures. Slowing growth and Household Spending as well as little change in inflation expectation. What is the overall takeaway . Much sums it up. The fed is trying to create enough room to raise rates at its june meeting without surprising the markets, and, of course, the june meeting comes with a revision of Economic Projections as well as a press conference with janet yellen, the fed chair. The fed also this time reiterated its desire to tighten policy at a gradual pace. That important . Because the fed is going to have to raise rates soon if it was to increase arming cost by 50 basis points before the end of the year. The conventional wisdom is that the federal open Market Committee will be reluctant if not loath to tighten the policy the closer we get to the election. Scarlet, mike, joe, that is my read. I am open to questions. Scarlet all right, any questions as you look at the overseas development, even oblique references to what is going on outside of the u. S. . There was only one, scarlet, and that was that the fed will continue to monitor Global Economic and financial developments, so the reference to what is going on overseas is not totally absent from the release, but it has been downgraded. It has been moved further down in the statement, and there is no explicit reference to the globalosed by this economic and financial developments, as there was back in march. Mike there was one dissent, and there is no reference to time. There is no reference to anything new in terms of how they are going to judge whether to raise rates, but they do talk about a better economy. I take away from this that if the economy continues to improve, that would mean june is live. Reporter yes, i think you are right. One thing i will draw your attention to is the second line, the first sentence of the red statement, where the Committee Talks about Economic Activity appears to have slowed, and so the read on that, if you will, is that the fed is playing down the weakness in Economic Data that we have seen since the beginning of the year, things like retail sales, for example, thewhat we might see in first read in firstquarter gdp. Again, this is all about parsing the statement. We do not know for sure because the fed provides us with nothing at these meetings without a press conference. It provides us with nothing beyond the statement, and that they are keeping the options open is very clear. Creating more than wiggle room, i left to do what it deems required based on the data should we see, as you say, the data improve between now and the june meeting. we talked about an analog setast october, where they it up. Is this as strong as the october report, or is it somewhere in between, where they are leaving the options open but not telegraphing . Reporter i think that last characterization, joe, hits the nail on the head. It is not as strong as the possibility of raising interest next meeting, but it goes part of the way there. Again, in this case, it is less and morelicit language about tone. Had the fed been more concerned about the data it has seen since the beginning of the year, we probably would have heard more dovish or read into this a more dovish tone. The fed has seemed more concerned about what is going on in china, for example, we might have read into this a more dovish tone, but we are not. It appears to be decidedly more hawkish. Far as tot go so describe it as very hawkish, but it is surprisingly hawkish in the degree that it is hawkish. How is that . Schatzker, it erik we will talk with you later. Remember, you can follow on the bloomberg terminal. Ericas been chuckling as was talking about this hawkish bent by the fed. Jim he has a hard job. I suggest that as journalists, we take a little less preferential view. They remind me in the aggregate of the most novice of novelist retail trend following investors. They have got no model. They have got no history of central banking. What they want to be is right, which means they with thee in sync latest headline, and that is not the approach to making money on wall street, nor is it the approach of making a good job of central banking. On the one hand, it you are one guy. Tony, you are one guy. On thise got 17 people committee. It is hard to get 17 people to agree with anything. In this compromise statement, it seems like they are saying, ok, the economy is a little bit better, the outlook is not that terrible anymore, and that is it. We are not making any promises going forward. Tony well, mike, you can say that the group has difficulty agreeing, and that is with the inflation. You recall that the the last two times, the fed left it out, and janet yellen took leadership by the wards and decided, ok, you participants cannot decide, so i will decide, it in her march 29 speech, she gave a view of the economy and outlook it seemed to show that the risks in her mind, to her way of thinking, word to the downside, so she went in contrast to her colleagues, in the week prior, seeming to suggest it was becoming more balanced. Now, think back and just look at the numbers on this and contemplate this. 2016, years leading up to there is only twice that the fed left out a balance of risk statement, and here it is three times in a row, and so to erik who said that the statement is hawkish, we would say that the absence of a decision on the balance of risks suggests that janet yellen will remain in saw in the what we statement that is only a baby step towards a rate hike. It did open a door and create some option for a hike in june, but clearly, no meaningful signal about a hike in june, so data dependency is the way to be thinking about the fed right now, and also, finally, the reference to growth seeming to slow, we will be thinking about that line tomorrow, all of us in the financial markets, when we receive the First Quarter gdp statistics, it are rightly believed to be close to zero, and the closer to zero, the more that line will have an it when we point on view it again. Tony, jim grant was kind to me, so i think i need to defend myself. Hawkish is the best i can do, given the tone of the statement, and you are absolutely right, gone is this alans risk, and that is critically important, but they seem to to have gone out of the way to choose words that underscore the strength of the domestic economy and played down the things that appeared to be holding back inflation. If anything, they make reference to the tightness of the labor market and the expectation that the labor market is going to continue strengthening, which, of course, everyone involved in policy making is going to like the fires of inflation, so maybe it is not so much a selfdefense but a further explanation, if you will, of what the statement does say, and also, just as important, what it needs out. Read, erik,s a fair and we will follow todays meeting, but recall that the fed has and outlook. It is in its economic rejections, and staffers have an outlook. It is in the minutes released three weeks after the minutes, and the fed is projecting growth to stay above potential, the u. S. Economys potential to grow for the next two and a half years, which is to say growth potential, how fast can it grow, and the fed thinks it is somewhere in the high ones or at two. Put it,th to be, as you fairly good, to look through the bad news that we have seen recently. That is its projection. Whatisk to the outlook is we do not know in terms of what the fed believes, because it has not decided and has not iterated it, so janet yellen them will be in charge, and unless data swing and the other direction towards the possibility of a hike, and there are a couple of jobs reports in the Inflation Report between now and then. The omission though with a reference to International Develop its is important. That is the step, you could say, that puts the fed in play for the, because it does show fed has reduced fear of it, but it did not downplay it enough to say the balance of risks were closer to being balanced. In before the fed hiked the risksit said werent nearly balanced, both in september and any subsequent meeting. They did not do that at all here, so that part is missing. It is gettingw if closer to that point, and it seems they do not think so. Holding you pointed out the fed to less reverence, pointing out the phds they have, less connected to reality, perhaps. The Unemployment Rate is down to 5 . The inflation, the Financial System intact. Do they not deserve credit or basically performing a lot better than a lot of people all of the other Central Banks around the world, which are much further from their goal . Jim america is and always should be, i hope, a shining beacon to the world, but dont forget we have had the weakest recovery of modern analysts. To that isamage substantial. Now, we did not have a crash crash or atal c crash, but with the diminished expectations, all of this fantasy talk of a new world what is the term they use for you cannot grow anymore . Is this environment what we want in america, and i would say the picture of our wouldbe president s on the stage remind us of what has gone wrong, and i think no small part of that is the failure of Monetary Policy. They have relegated themselves functions that formally were limited to the plan in the soviet union. We can discuss that forever. Lets try it. Let me make one quick point about what eric and tony were talking about. Sometimes a cigar is just a cigar. Maybe they decided to drop it because they do not like that formulation. It has gone on now for three meetings. Into it read too much is there or not in what they are trying to tell us. It may just be gone as an instrument of communications. We criticize them for having their statements be too long. This is a shorter statement. We should be happy. Scarlett jem and tony, thank you so much. Still ahead, the former minneapolis fed president joining us next on Bloomberg Television and radio. Scarlet this is a bloomberg special report on Bloomberg Television and radio. This is the fed decides, and i am scarlet fu along with joe and michael mckee. We want to go back to erik schatzker. Mike was positing that perhaps they drop this to a balance of risk or risks posed by the conditions because they just thought it was not a useful way of communicating what is going on and what they plan to do next. I think that is a very fair question, and we may not know until we see the minutes we mays meeting, and never know if it is not documented in the minutes, but there does not appear to be in any effort toeen try to reconcile, if you will, the dropping of that phrase. There is nothing like, for example, the risks posed by Global Economic and financial developments, which we saw in the last statement, which, if substituteerved as a for the balanced risks. There is no reference to risks. It is just not there. The fed says it is going to continue to monitor these external developments but does not characterize them as risks, so mike might very well be right. I am amazed at how Little Movement there is on anything. Anre was a little bit of uptick in rates right after the announcement. They came back on the s p still basically flat. That janet yellen once again i feel like she has this ability to basically do a good job of doing these statements without causing much volatility, coming in right where the market expects without rocking the vote too much. Threading the needle . Joe landing the plane, threading the needle. Yes, and investors have applauded her for her ability to do that in the past. I do remember larry think, who we were talking about earlier, who we werek, talking about earlier, and there was the pain of the december meeting that was felt all of the way through the middle of february, but, yes, on a number of other occasions, the committee perhaps led by dylan , haves case, and others found ways of choosing just the right language to establish just the right Market Expectations so that when the fed chose to act the next time around, people were not as surprised that they might have been had it not then so artful. Scarlett all right, erik schatzker, thank you so much, reporting live from the Federal Reserve. Still ahead, we have got , theana kocherlakota former minneapolis that president and currently a professor, and he will be joining us to give us his interpretation of what the fed meant that it dropped that phrase. We will be back. This is a bloomberg special report, the fed decides, on bloomberg tv and bloomberg radio. Along with Joe Weisenburger and michael mckee, i am scarlet fu. Economic and developments in chile to pose a risk. They added global and economic financial developments in a list of items it is monitoring closely, so semantics matter. Joining us here is the former minneapolis fed president , now a columnist and a professor at the university of rochester, narayana kocherlakota. Professor, give us your interpretation of what this statement means . Mr. Kocherlakota welcome and thanks a lot for having me on. It is a real pleasure. Well, i think that the committee wanted to indicate it continues to be data dependent, and every meeting is live, and i think they were successful in doing that with this statement, that they did not put any special emphasis on the upcoming meeting, and they did not put any special deemphasis on the upcoming meeting, so i think this statement probably served the purpose that the committee was looking for. The one thing it does tell you is that they still believe in the efficacy of extraordinary Monetary Policy, because they are not talking about getting rid of it. Do you think we are still getting more out of extraordinary policy than we would if they started raising rates and putting more of an equity premium on the market . I certainlykota think we are in a better position now than we would he if we were that if the federer to raise rates. Fed were to raise rates. To see a lot of risks around the world. I continue to see very suppressed Inflation Expectations. I see slack in the labor markets. These are all inputs that call out for accommodative Monetary Policy, and so i think that the fed is wise to continue to emphasize the need for accommodative Monetary Policy, that my own perspective would be that you might even think about going further in that direction as opposed to continuing to talk about normalization. Joe a professor, you argued that the fed once the rate hike cycle begins, they seem to wouldthis path where it be hard to backtrack. Is there any way for them to do this smarter than they are right now . Butin the rate hike cycle show they are not going to move too fast or are really going to wait for certain data to come into place, such as inflation, before they continue to move higher . s a couple ofta things. I think that is a great question, first of all. Evencycle, going back further than raising rates, and it really goes back to may 2013, when chairman bernanke started talking about tapering publicly. I think that was really the beginning of the journey we have been on and then for i guess Something Like three years now. I actually think the emphasis on with Interest Rate movements is overplayed in the communication. I think that they should be more willing to be more responsive to and perhaps respond aggressively to the data when it is long. What would that data mean . The data i think you are mainly looking for here is stronger inflationary pressures than what youre seeing right now in the u. S. Economy, but there is a andinual emphasis indication on, look, we are not going to go too fast. We are not going to go too fast. We are not going to go too fast. Bute moving too soon now, it has also concerned the hawks, because there will be a strange if you see it move too rapidly. I think there is a willingness to move. Scarlet ok, narayana , joining us from rochester, you are staying with us, and another guest coming up. A quick check of the Market Reaction to the decision of no change. The dow industrials up by a third of 1 , and the twoyear points. 85 basis of course, it had its big movement in the last seven days, and the dollar yen at 111. 22. Is up fromde oil below 45, and the emerging markets, they have moved into the green call him there. 0. E euro dollar at 113. 23 ai scarlet this is a bloomberg fedial report, the decides. Lets begin with headlines on bloomberg first word news. Mark crumpton has more. Mark republican president ial candidate ted cruz will name former candidate Carly Fiorina as his running mate. Thats according to people familiar with the situation. Fiorina dropped out of the race earlier this year and endorsed uz, who cannot get the 1237 delegates needed to clinch the nomination. He and john kasich have joined forces to try to prevent donald trump from getting the necessary delegates. Cruz plans to announce this afternoon. Bloomberg television will carry the event live. Mr. Trump made headlines, saying he wants to shake the rust off american foreignpolicy and place to focus on what is best for the united states. He made comments during a foreignpolicy address in washington. Mr. Trump my foreignpolicy will always put the interests of the American People, and american security, above all else. Has to be first. Has to be. That will be the foundation of every single decision that i will make. Mark the speech came a day after his suite of five northeastern primaries that put him closer to the republican nomination. As a case involving hush money and violation of banking laws, but the sordid side emerged involving a man one second in line to the presidency. Today, a federal judge sentenced former House SpeakerDennis Hastert to 15 months in prison. Last fall