The wave of Fed talk comes as bond yields have spiked, with the 10-year yield 10_YEAR -0.08% jumping to the highest level since Aug. 2011.
Federal Reserve Chairman Ben Bernanke surprised the markets last week by saying a taper of the central bank’s $85 billion-per-month bond-purchase plan could start later this year and that an unemployment rate of 7% could be the time when all the purchases are completed.
Markets are now pricing in four quarter-point rate hikes in 2015, versus the two the market had previously assumed.
This is turn has rattled global stock and bond markets.
The most unusual commentary came from Minneapolis Fed President Narayana Kocherlakota, who isn’t even a voting official this year but felt compelled to put out a statement, and hold a conference call, defending the central bank.
He insisted the Fed did not become more hawkish, and said that as a supporter of bond purchases, he was in a position to make that case.
He stressed that he was not speaking for the Federal Open Market Committee as a whole; in fact, he said it would have been a “tough” vote, since he thinks the Fed needs to clarify its intentions more when it stops buying bonds.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.