Janet L. Yellen watches before being introduced on stage at the Town Hall Los Angeles forum in Los Angeles March 23, 2010.
Ever since Federal Reserve Chairman Ben Bernanke suggested that the Fed could begin to taper, or gradually reduce, its stimulative bond-buying program, the global financial markets have been going crazy trying to make sense of the comments.
Interest rates have surged, gold has collapsed, and the Dow has regularly exhibited 100+ point swings.
Fed insiders have offered some color since we last heard from the Fed Chairman.
"There have been a lot of Fed speakers since the June meeting, including both Bank presidents and governors," said Vincent Reinhart, Morgan Stanley's Chief U.S. Economist and former Fed insider. "The latter tend to be especially informative because they often channel the staff view. Reassurance was in ample supply. We learned that the Fed cares about the pace of economic growth, worries about disinflation, and monitors financial stability."
Simply put, the Fed insiders have been stressing the importance of economic data in determining when they'll actually alter monetary policy.
"Listen for more reassurances about data-dependence and flexibility," added Reinhart. "The Fed’s solution to communications problems is usually to talk more."
One voice we haven't heard yet is that of Fed Vice Chairman Janet Yellen, the person who is first in line to replace Ben Bernanke should he step down at the end of the year.
Unfortunately, she's not scheduled to speak anytime soon and we probably won't hear her say anything substantial for a while.
"A problem for us, however, is that probably the most persuasive one in explaining the Fed’s intent will likely operate under radio silence for some time," said Reinhart. "As long as the top Fed job is in play, Vice Chair Janet Yellen is unlikely to risk a high-profile speech on the likely path of monetary policy."
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