Tags: federal reserve | communication | Jeffrey Lacker | Central Bank

Fed Communication Went Through 'Rocky' Patch, Lacker Admits

Thursday, 27 June 2013 07:45 AM EDT

Federal Reserve communications have been through a "rocky" patch but financial markets are now more in sync with the central bank's message, a senior Fed official said on Wednesday, shrugging off a week of violent volatility.

Jeffrey Lacker, president of the Federal Reserve Bank of Richmond and a persistent critic of the Fed's massive bond-buying campaign, said it was always going to be difficult to discuss ending the program because of its open-ended nature.

"Markets got a little bit ahead of us in terms of what they were expecting, by way of how long these purchases would continue, and I think they've gotten into better alignment now with the committee's expectation," he told Bloomberg Television, referring to the Fed's policy-setting committee.

Editor's Note: Save, shop and invest like an insider! Our experts lead the way each month in The Franklin Prosperity Report. Click here to learn more.

Fed Chairman Ben Bernanke sent global markets into a tailspin last Wednesday by announcing that the central bank expected to begin to slow asset purchases later this year, and would likely end them in mid-2014, assuming the economy recovers as it expects.

Lacker is one of the Fed's most hawkish officials.

A different view was voiced by Narayana Kocherlakota, president of the Minneapolis Fed. He told CNBC that the market reaction was "more outsized than I would have anticipated personally." That remark reinforced comments he made on Monday, in which Kocherlakota argued that markets were wrong to think the Fed had become more hawkish on the need to raise interest rates.

Neither official has a vote on policy decisions this year.

Critics complain that Bernanke bungled the message by confusing investors, who refuse to accept his distinction between tapering bond purchases and tightening monetary policy, even though he went out of his way to spell out that rates would stay near zero for a long while after bond buying ends.

The yield on the 10-year U.S. Treasury note spiked to 2.55 percent in late New York trade on Wednesday from around 1.65 percent in early May. Two of the sharpest jumps occurred on May 22, when Bernanke initially discussed tapering bond purchases in the next few meetings, and after his Wednesday press conference.

Lacker acknowledged there had been problems, but argued Bernanke had done an "excellent job" in describing policymakers' views on how policy will evolve going forward.

"It has been a rocky period over the last couple of months for communication from the Fed," Lacker said. "We had to solve a new communications puzzle for ourselves this time. I think we got to where we need to be."

Editor's Note: Save, shop and invest like an insider! Our experts lead the way each month in The Franklin Prosperity Report. Click here to learn more.

© 2024 Thomson/Reuters. All rights reserved.


StreetTalk
Federal Reserve communications have been through a rocky patch but financial markets are now more in sync with the central bank's message, a senior Fed official said on Wednesday, shrugging off a week of violent volatility.Jeffrey Lacker, president of the Federal Reserve...
federal reserve,communication,Jeffrey Lacker,Central Bank
462
2013-45-27
Thursday, 27 June 2013 07:45 AM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
 
Get Newsmax Text Alerts
TOP

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved
NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved