CNBC Survey Shows Fed is Paying Too Much Attention to the Market

The market thinks the Fed pays too much attention to it.

Seventy percent of respondents to the June CNBC Fed Survey said the Federal Reserve is too concerned with market reactions to its monetary policy, while half said the central bank is overly influenced by the latest high-frequency economic data.

“The Fed has paid too much attention to short-term market volatility,” said John Ryding, chief economist at RDQ Economics. “Communication is unclear. … The Fed needs to rethink and clarify the basis for policy decisions.”

But a 60 percent majority of respondents said the Fed pays the right amount of attention to international economic and financial developments, a key reason the central bank has been on hold since it raised rates for the first time in nine years last December.
Some think the Fed should go even further. “International markets and events are much more important than the Fed seems to recognize or to admit,” Robert Brusca of FAO Economics wrote in response to the survey.

The 41 survey respondents, who include economists, fund managers and analysts, unanimously think Fed policymakers will leave rates unchanged at current levels when they meet this week. Half pointed to the weak May jobs report as the main reason the Fed will pause. Only 13 percent cited uncertainty surrounding the Brexit vote on June 23. Survey respondents now expect the next rate hike will be in September, a month later than previously thought.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza