Hi Folks,
Right about now Jerome Powell is wishing he’d never come up with the brilliant idea of holding a press conference after each FOMC meeting from today’s meeting in the US Wednesday. Of course he initially set this up to aid Fed communication and market understanding – it was all part of the plain English Fed he wanted to run.
The trouble was that rather than being a volatility dampener Powell’s plain English approach has caused markets – prone to over reaction, headline chasing algos, misinterpretation, and overreaction in the press – to overreact. He’s language that included comments to the effect that the Fed was a long way from neutral, that the balance sheet was on auto pilot (yes Yellen said that too) have become volatilty amplifiers
So Powell has to be careful what he says and how he frames it tonight – I very much doubt either hey or the Fed wants to ignite another stock market rally if the economy genuinely can’t support one. But neither does he want to startle the horses while the Fed pauses and awaits clarification that the economy is in the fine fettle most of the Fed still thinks it might be in.
Much to discuss let’s dive in
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