10 Words From the Fed Chair That Could Reshape Market Expectations
Federal Reserve Chairman Kevin Warsh has changed the dynamics of the Fed's communications, but he hasn't changed the Fed's mandate.
Overview
Kevin Warsh has dramatically changed the way the Federal Reserve communicates to the markets. His push to provide less guidance is a very big deal, leaving investors to judge the future for themselves. In response, bond yields have risen dramatically over a very short period. Why? Because inflation is running hot right now and, despite the lack of guidance, investors are expecting the Fed to raise interest rates.
Warsh's Jackson Hole speech did nothing to assuage those concerns, as he highlighted that "the Fed's predominant focus right now should be on prices." Those 10 little words are an important statement about the future direction of interest rates. Any adjustment to that wording after the next Fed meeting could reshape market expectations. Here's what you need to know.
Image source: The Federal Reserve
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Originally published at www.fool.com.