Fed Quarles Says Data Dependence Means Only Significant Changes

Federal Reserve vice chairman Randal Quarles said the Fed’s increasing “data dependence” does not mean it will react to every rise or fall in economic statistics or markets, but only to “significant changes in direction.”

After a week in which markets have swung in their interpretation of where the Fed is heading, Quarles appeared to anchor the Fed’s move towards slowly but steadily continuing to raise interest rates.



“We should be data dependent but not reacting to every wavering of the needle across the dial…We have described in all the communications tools a path that is pretty clear,” Quarles said. “We are following a strategy and taking account of data over time as it comes in and in response to significant changes in direction.”

That path currently has the Fed raising rates later this month and throughout 2019, an interpretation some investors have called into question given the recent focus of policymakers on weakening global growth and other recent data.

Stock markets in particular rose dramatically last week after construing remarks by Fed chair Jerome Powell to mean that the central bank may be nearer than thought to pausing the cycle of rate increases it began in late 2015.

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