A Brief Note on Fed Communication

October 23rd, 2013 at 9:57 am

Some articles out today show an interesting dynamic at work regarding the Federal Reserve’s communication with markets.  Simply put, by surprising the markets last month, the Fed persuaded them that they really mean it when they say they’re in data-driven mode.

Given the weaker-than-expected jobs report, most commentators now expect the Fed to hold off the taper (reducing the amount of their monthly asset buys) for another few months.  That’s a significant flip from a few short weeks ago, when markets turned a deaf ear to Fed chair Bernanke’s protestations that the start of the taper will be determined by incoming data.

Sometimes you have to surprise people to get their attention.

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