The US Federal Reserve speaks ....... but what are they saying ?

19/3/15

 The US Federal Reserve speaks ....... but what are they saying ?

For the full run-down see the Financial Times : "Fed loses patience..." p.25, "Softly, softly p.28 , "Short View" p.35, "Markets" p.47.

 

With a few celebrated exceptions (remember Alan Greenspan's immortal "irrational exuberance"?) , central bankers tend to avoid saying anything that might provoke sharp market reactions or that might commit them too rigidly to any particular policy or timescale. It's up to the rest of us to divine any hidden meanings behind the words. Yesterday's statement by Fed Chairwoman Janet Yellen is a case in point. With regard to the future for US rates, she said that the central bank had dropped its pledge to be "patient" before raising rates. Hawkish, one might think ..... but then she also said that did not mean that it was now "impatient" on the issue, and when she talked of lower growth and inflation predictions, remaining slack in the labour market and in particular the strength of the US Dollar, the consensus was that this was a doveish statement. Which is to say , no rate rises before September or December, and definitely not in June. Result ? Bonds up, equities up, dollar down as much as 3%. No wonder they're careful with what they say.