Fed officials are giving more speeches than ever but their message is still muddled

pulse

May 4, 2017 7:57 PM

They don’t call it the Federal Open Mouth Committee for nothing.

John Williams

That’s the nickname traders have given to an increasingly vocal Federal Open Market Committee, the Fed’s policy-setting body. Over the years, the central bank has made considerable strides in improving transparency and communications, even if the cacophony of public pronouncements sometimes devolves into a range of competing policy messages that confuses more than clarifies.

Keep in mind, the Fed did not start publishing its interest rate decisions until 1994. Before then, traders had to look at movements in the Treasury bond market to figure out what the central bank was trying to do to the supply of bank reserves.

Under Alan Greenspan’s 18-1/2 year tenure, there was greater communication with markets, but it mostly came from the Chairman himself. Ben Bernanke instituted a more collegiate environment that current Chair Janet Yellen has extended. This gives a greater voice to other board governors and regional Fed officials, who make frequent pronouncements.

On Friday, May 5 alone, three top Fed officials are giving remarks: Yellen, her Vice Chair Stanley Fischer and San Francisco Fed President John Williams. The Labor Department will also be releasing its monthly employment report for April.

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