Fed Speeches May Clarify Policy Path

After a Federal Reserve statement and press conference that may have provided more questions than answers, and produced oddly divergent reactions in the stock and bond markets, investors will look to this week’s heavy docket of Fed speakers to provide clarity about the future of monetary policy. But whether they will get the clarity they seek is a different matter.

In Wednesday’s statement and the press conference that followed it, Fed Chair Janet Yellen “somehow was able to be more dovish than people expected on one hand, and more hawkish than people expected on another. It certainly lacked clarity,” said Jim Iuorio of TJM Institutional Services.

The key tension on Wednesday was between the central bank’s projections and its actual policy statement. In the statement, the Fed kept the language that it planned to keep the key federal funds rate target ultralow for “a considerable time after the asset purchase program ends,” despite speculation that it would lose the phrase.


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