Appearing on CNBC, Western Asset Portfolio Manager/ Research Analyst John L. Bellows said Western Asset expected the inaction taken by the U.S. Federal Reserve, which announced it would leave interest rates at zero on Wednesday. 

As Mr. Bellows said on CNBC, the most important part of this week's Fed statement was that it "described the weakness in the first quarter as 'transitory,' Fed members are willing to look through that weakness. They think it's oil, they think it's the dollar and they think the economy is going to be stronger in the second and third quarter. And whether or not they hike in September or later really depends on whether they are right on that call."

In the statement from the Fed, calendar-based forward guidance was completely removed.

"This is an important step for the Fed, and removing forward guidance opens up the possibility of rate hikes at future meetings," Mr. Bellows commented. "In fact, the June FOMC meeting will be the first meeting since March 2009 where Committee members will have real discussions about raising rates. While we don't think they will raise rates in June, the fact that they are discussing it will be somewhat of a milestone."

Although the Fed is unlikely to hike in June, it appears to be on track to raise rates later this year.

As noted in a recent whitepaper authored by Mr. Bellows, "While there is certainly continued scope for low inflation to concern the dovish Fed, we think it's premature to write off 2015 completely. Our view has been that the Fed has a strong desire to continue its process of normalizing monetary policy, and it seems likely that the conditions will be met for the Fed to do so later this year."

The full Western Asset Policy Matters whitepaper, "Fed Update: Don't Write Off 2015 Just Yet," can be accessed via the Western Asset website.