There's another reason why everyone's obsessing over Janet Yellen's upcoming speech
All eyes are on Jackson Hole, Wyoming as the world’s top monetary policy leaders meet for the Kansas City Federal Reserve’s Economic Policy Symposium. The main event will be Federal Reserve Chair Janet Yellen, who speaks at 10am ET on Friday. Her speech is titled “The Federal Reserve’s Monetary Policy Toolkit.”
The world will listen carefully for what she may or may not say about monetary policy and its direction.
But there’s another reason why the world is obsessing over her upcoming speech. See the chart above.
“A recent lack of appearances by Federal Reserve Chair Janet Yellen could amplify the significance of her comments at this Friday’s Jackson Hole Symposium,” Bloomberg LP Chief Economist Michael McDonough said. “Year-to-date, Yellen has delivered only two official speeches, excluding her post FOMC press conferences and Congressional testimonies, according to the Federal Reserve’s website. Since 1996 the Fed Chair averaged 19 official speeches a year, with the fewest number coming from then Chairman Alan Greenspan totaling only eight in 1996, coincidentally another election year.”
By this time last year, Yellen had spoken seven times. In 2014, she had spoken 10 times.
To be clear, the Federal Reserve Board as a whole hasn’t exactly been silent. McDonough notes that Fed Vice Chair Stanley Fischer has spoken nine times so far this year, including once this past Sunday.
“We are close to our targets,” Fischer said to The Aspen Institute in Colorado.
All of this is critical as Fed-watchers, economists, traders and everyone else anxiously await the Fed’s next move, which could be an interest rate hike in December. This would be the first hike since last December.
“We believe Chair Yellen’s comments will underscore the desire of the Federal Reserve to move rates higher later this year,” UBS’s Drew Matus said. “January Fed funds futures are showing a near 50-50 view among market participants while surveys of economists show almost 75% of analysts expect a rate hike this year. Despite the mixed messages evident in the July FOMC minutes, even a simple acknowledgement of the reduced risks and better economic data should help herd market participants closer to their economists.”
McDonough and his team are among economists who expect the Fed to hike rates in December. Furthermore, they forecast two or three more hikes coming in 2017.
“The performance of the economy will warrant such an acceleration in the pace of tightening, as the onset of full employment generates wage pressures, faster consumer spending and more inflation,” McDonough said.
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Sam Ro is managing editor at Yahoo Finance.
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