Listen: Federal Reserve, Jay Powell And New York University discussed on Marketplace with Kai Ryssdal
"We are going to stipulate here. In fact, we are going to lean into the trying to interpret the Federal Reserve plainspoken as Jay Powell tries to be is not unlike the Kremlinology of years gone by trying to figure out who was in charge by looking at who was standing next to whom at the mayday parade's, except with the fed. It's parsing every syllable, that comes out of J Powell's mouth. So today, an experiment of sorts with the ultimate goal of figuring out how well the fed is saying what it wants to say. And how well we are interpreting it. We got people on the phone today. Just a couple of minutes before the Fed's announcement wrapping up its two day meeting on interest rates. This was two o'clock, east coast time and we asked what they thought was going to happen. I'm Sydney Dixon. I'm a professor of economics at New York University. It's one forty one pm on June ninth. Nine hundred twenty nine thousand nine well, I would say that we're sort of expecting them to hold the line on rates for now but perhaps which their language to more ready to act description of how they will. Perceive future risks, and they're just expressing a willingness to, to act, should, you know, the data turn worse than it's been. My name is Mingjia a trading manager at betterment, and it is one fifty seven PM on June nineteenth twenty nineteen. I'm leaning towards I think it's going to be more of a cautious too hawkish kind of tone that they're going to take. I think they're going to leave rates on cut but signal to cut in December, or they might mentioned in the near future. I really can't see them cutting in July unless it's an emergency. Spoiler alert. They were both basically right. No rate cut now. But well, you're sure Bill overall or policy discussions focused on the appropriate response to the uncertain environment. The projections of appropriate policy show that many participants believe that some cut in the federal funds rate will be appropriate in the scenario that they see as most likely no more patients for the fed, if you think back to the last couple of minutes, we got back on the phone. With our test subjects after show palace press conference to see how they were feeling about their predictions, I up Sydney Ludvigsson at NYU, stern. I didn't see much to contradict, what I expected. You know, the message is worse were not quite saying that we're in patient mode anymore, but we are not cutting anything today, but we're actively monitoring for more sustained evidence of the kind of uncertainties and concerns that the chairman was talking about was right. Here's John at betterment. I listened back to it because, you know of my own ego, and I was like, was I right. I definitely feel like the markets were expecting something, a lot more dovish than what came out. That's probably true dovish there, by the way means not at all worried. Not all that really worried about inflation. There were a little bit thus leading more toward cutting rates than raising rates. I know there are a lot of people out there to whom this obsession with what fed says sounds obsessive. But it is the entire American. Economy and probably the global economy, as well that we're talking about here, but also be the fed knows were watching. Here's ming. John one more time from betterment. We analyze fed speeches like an eighth grader analyzes like text messages, you know, like every single word matters every single word couns after two thousand and eight they realize, like, oh, the markets are watching, and especially with the rapid dissemination of their like press releases and how quickly markets respond to things like that. I think they have only become more cautious cautious and aware on that note, by the way, about the whole timeline of this thing. If you want wanna historic look at what the fed has done with interest rates over time. We have that at marketplace dot org."