It’s only temporary. That’s the opinion of Fed Chairwoman Janet Yellen of the poor first quarter GDP growth in the United States. As sluggish starts have become the standard in recent years, the economy is estimated to have expanded only 0.7% in the first quarter. That did not change the normalization course the Federal Reserve is on as revealed in the decision this week. As expected, there was no change to rates but the language left open the possibility of more hikes (the next perhaps in June) and did not provide further guidance on what they are going to do with the $4.5 trillion of assets on their balance sheet. The stronger than expected employment report certainly supports their view that slow growth is “transitory.” An increase in non-farm payrolls of 211,000 exceeds the monthly average of 185,000. The unemployment rate dropped to 4.4% but that was caused in part by increased hiring as well as more people leaving the labor force. The Fed may face less pressure to act as we move through the year, however. To start 2017, oil prices were higher and there was a pervasive belief that pro-growth policy from the Trump Administration would further boost inflationary pressure. That has changed as increasing production from American shale has led to oil price declines and difficulty around repealing the Affordable Care Act has reduced confidence of how coordinated the Republicans are (regardless of the House passage of a bill today). All of that means that the Fed may not be pushed to act if inflation does not trend higher. They have come too far in this policy experiment to risk tightening too quickly.