The Federal Reserve will release its latest policy statement tomorrow afternoon, shortly after which Chairman Ben Bernanke will hold his quarterly press conference. Unlike the obfuscation that characterized the Greenspan era, Chairman Ben loves to verbally get down with the common man, becoming increasingly transparent as his term has progressed.
Increased openness isn't the only change at the Fed. This is the first meeting for two new voting FOMC members as well as the launch of a program in which each voter actually gives their own economic forecast. "It's a lot of new information from the Fed," understates Jim Bianco, president of Bianco Research, in the attached clip.
Given how closely every utterance from the Fed is scrutinized, the increased transparency is apt to be a mixed blessing for traders, at least in the near-term.
"The history of Fed transparency has become very clear," says Bianco. "Every time the Fed comes up with a new scheme to increase transparency, the market misreads it; the market reads into things that aren't there and they overreact or they under-react."
For less active traders the main question is whether or not "QE3" --or another round of quantitative easing-- is in the cards.Read More »from Ahead of the Fed: What to Expect From Bernanke