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It Doesn’t Matter What the Fed Says

14 Years ago | October 29, 2014 12/9/22, 12:00 AM

Part of our advocacy is to pass on insights to our members that will hopefully help with trading. This is one of those times as all global traders are fixated on today’s FOMC decision and accompanying statement. The key focus is on the statement as each change in the language will be scrutinized under a microscope for any hints of what maybe ahead. But, does it matter? Is this just an excuse to move markets?

The FOMC statement is important when it signals policy changes or sets up a future change in monetary policy. However, I contend that tweaks in the language mean little other than giving markets an excuse to move. It is expectations of future monetary policy that drive markets as they try to anticipate the timing of interest rate changes and this, in turn, is fueled by economic data. So it is data dependency that is most important as the Fed is as reliant on data as the market these days in shaping future policy.

So, in the end, it is not any tweak in the FOMC statement that ultimately matters as it is economic data that will drive expectations of future monetary policy. It is more a matter of what I do than what I say even though the market will likely react to the latter when the FOMC releases its statement.

Jay Meisler, founder

Global Traders Association

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