Janet Yellen's Quiet Period

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The Fed's vice chairwoman is so very, very close to losing the "vice" and isn't of a mind to sabotage it by saying anything to anyone who is not a United States Senator.

The Economic Club of New York has canceled a coming speech by Fed Vice Chairwoman Janet Yellen as the White House moves closer to selecting a new head of the central bank.

The group said Friday that the Oct. 1 speech by Ms. Yellen had been called off but gave no reason.

And you can expect even more silence if President Obama goes out on a huge limb to ensure an unbroken line of masculinity at the central bank. Or if Yellen is as collaborative and open to suggestion as the Committee For A Larry Summers-Free Government would have you believe.

The lesson, according to Stanley Fischer, the former head of the Bank of Israel, is the Fed would do better not to telegraph future policy decisions.

Mr. Fischer, who was talking at a conference organized by broker CLSA in Hong Kong on Monday, said he had grave reservations about moves by some central banks to give more information about what they plan to do….

Mr. Fischer said making such statements – known as forward guidance – can cause market confusion.

“You can’t expect the Fed to spell out what it’s going to do,” Mr. Fischer said. “Why? Because it doesn’t know.”

He added: “We don’t know what we’ll be doing a year from now. It’s a mistake to try and get too precise.”

Yellen Speech Canceled as White House Weighs Fed Pick [WSJ Real Time Economics blog]
The Key to Forward Guidance? Don't Give It, Fischer Says [WSJ Real Time Economics blog]

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