Some of us still look forward to meetings of the Federal Open Market Committee with a sense of innocent wonder. There's something special in the idea that a mahogany-paneled conference-roomful of wonky policy makers can just rearrange some words on a page and voila, trillions of dollars in financial assets are suddenly worth something else. Though it doesn't rise to the level of the running-of-the-interns that greets every Supreme Court announcement, there's a pleasing amount of pomp and ceremony involved.
So when Fed Chair Janet Yellen gets up and all but blurts out the ending of the meeting two weeks hence, it's hard not to feel a little disappointed. Even if it's usually a done deal by the time the meeting actually rolls around, it's nice to play along. But Yellen's comments Friday basically eliminated all suspense.
Federal Reserve Chairwoman Janet Yellen signaled the central bank is likely to raise short-term interest rates at its March meeting, and suggested more increases are likely this year if the economy performs as expected.
“Indeed, at our meeting later this month, the [Federal Open Market] Committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate,” Ms. Yellen said in remarks prepared for delivery at the Executives’ Club of Chicago.
So yes, sure, this is forward guidance, but still. Can't we at least pretend? Stocks barely batted an eye as market-based expectations of a rate rise after the March 14-15 meeting rose to 92 percent from 40 percent last week. It didn't hurt that Yellen tagged in a few of her colleagues to underline the point.
On Tuesday, the leaders of the San Francisco and New York Fed banks both spoke of a need to raise rates relatively soon, a message echoed by Fed governors Lael Brainard and Jerome Powell later in the week.
Even if the near-term outlook for medium-term economic progress toward long-term policy normalization looks clear enough, Yellen and co. are no closer to clarity. “A great deal of uncertainty” still surrounds Trump's ever-changing fiscal policy plans, Yellen suggested. But that won't keep the Fed from raising rates a couple-few times in 2017, barring “new developments that might materially worsen the economic outlook.” Waiting for one of those developments might be more interesting these days than betting on the Fed.