For the Fed, one last meeting before they go ‘Live from DC!’

0
17
© Reuters. FILE PHOTO: The Federal Reserve building is pictured in Washington, DC© Reuters. FILE PHOTO: The building is pictured in Washington, DC

By Ann Saphir

SAN FRANCISCO (Reuters) – This week marks the last time Federal Reserve policymakers will set interest rates at a regular policy meeting and not follow it up with a lengthy press conference by the chief of the U.S. central bank to explain and perhaps defend the decision.

Starting next year, Fed Chair Jerome Powell will hold a press conference after every one of the Fed’s eight regular meetings. He is already scheduled to give a press conference after December’s meeting, one of four Fed Chair press conferences held each year ever since Ben Bernanke gave the first one in 2011.

The shift opens the door to more transparency, but also less predictability. In the seven years since Bernanke’s decision to give that first press conference, markets have come to expect policy changes only at the four meetings each year with a regularly scheduled press conference, despite policymakers’ insistence that every meeting is “live.”

Article continues below Advertisement...

Now, every meeting will be live; and just in time, too, as the Fed signals it is nearing the time when interest rates will be close to “neutral” and at a point where the Fed may be just as likely to lower rates as to raise them.

Holding press conferences at every meeting is an extension of years of increasing transparency at the Fed, which decades ago didn’t even issue a statement to describe its rate decision but relied instead on traders inferring it from the central bank’s activities in open markets.

Back then, traders famously watched the size of Fed Chair Alan Greenspan’s briefcase for clues to whether the Fed would raise rates. In 1994, the Fed released its first post-meeting statement of less than 100 words; over the years it expanded its statement until its length reached a post-crisis zenith of more than 900 words.

(For a graphic showing how the Fed has communicated through the years, please see https://tmsnrt.rs/2QpUvcR)

Under Fed Chair Janet Yellen, the Fed began trimming its statement dramatically, a trend continued by Powell since he took over this year.

Now he’s set to add more words of explanation to each Fed rate decision, by way of a post-meeting press conference. For this week, however, enjoy the quiet.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the , it is one of the riskiest investment forms possible.

Source: Investing.com