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Fed Statement Sows Confusion With Projections All Over the Place

NEW YORK ( TheStreet) --It's enough to make you feel Harry Truman's pain.

The Federal Reserve did the cause of clarity no favors today. The central bank's Open Market Committee cut ts 2014 growth forecast Wednesday, modestly pushed back its view of when the first increase in interest rates might come.

Yet, the Fed made several changes in the statement it publishes after each meeting on monetary policy -- all of them pointing to a faster pickup, saying economic growth "has rebounded," business investment "resumed its advance" and labor markets "generally showed further improvement.''

"Bring me a one-handed economist," Truman is said to have exclaimed, demanding one who would never say "on the other hand."

Amen, Harry.

If anything, the Fed's stance points to more dovishness for longer -- but only a little.

The big move is the cut in this year's growth forecast, which fell to 2.1% to 2.3% from a range of 2.8% to 3% the Fed released in March. That reflects the drop in output during the cold winter this year. For the markets the Fed is implying that in early 2015 the recovery will still look uncertain enough that few policy makers will want to experiment with tightening very much.

Waiting until mid-2015 to get a few strong quarters in a row, which looks more likely after the early-2014 mess, means any move to begin boosting rates in 2015 will come toward the end of the year.

The new survey of committee participants backs that up.

Twelve of the 16 FOMC participants think rates should begin to rise next year, down from 13 when the committee's last set of projections were released in March. Three think the first hike should come in 2016, up from two in March. This is the so-called dot-plot that created what little hoop-la there was heading into this meeting.

As expected, the Fed cut its monthly bond purchases to $35 billion from $45 billion as its most-active program to push interest rates lower winds down.

That may well be because the Fed's newest members -- including Vice Chair Stanley Fischer -- are more dovish at the margin than people they replaced. Fed Chair Janet Yellen suggested as much at her press conference.

There's no doubt the economy is at a hard-to-read inflection point, made much harder by consumers' reluctance to spend as freely on housing as on cars and other durable goods.

But the Fed could have given the market a clearer picture. If the economy is weak enough to lower growth forecasts, why muddy the water by talking about how well things are doing compared to three months ago?

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.