Share Of Sentences With Data Or Process Words* At FOMC Press Conferences
While the Fed held rates steady at its July FOMC meeting this week, 30-year Treasury yields recorded their largest one-day jump in over a year after the post-meeting press conference. What gives? For a Fed Chair supposedly moving away from forward guidance, Chair Warsh used as many words at the press conference as his predecessors. However, Warsh’s comments pertained more to the Fed’s process rather than the substance of economic data. While he peppered his remarks with references to the committee’s commitment to achieve price stability, he did little to justify why the Fed stayed on hold and even admitted that the softer-than-expected June CPI was not one of the reasons. With unemployment near 4% and inflation hovering above 3%, can the Fed talk its way to price stability? Or, should the Fed be more patient and wait for more data? After 5 years of missing its inflation target, we expect the Fed to act soon. In the meantime, let’s hope markets have not run out of patience.
