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For the Fed, one last meeting before chair goes live from DC

Reuters logo Reuters 11/8/2018 Ann Saphir

This week marks the last time Federal Reserve policymakers will set interest rates at a regular policy meeting and not follow it up with a lengthy press conference by the chief of the U.S. central bank to explain and perhaps defend the decision.

Starting next year, Fed Chair Jerome Powell will hold a press conference after every one of the Fed's eight regular meetings. He is already scheduled to give a press conference after December's meeting, one of four Fed Chair press conferences held each year ever since Ben Bernanke gave the first one in April 2011. 

The shift opens the door to more transparency but also less predictability. In the seven years since Bernanke's decision to give that first press conference, markets have come to expect policy changes only at the four meetings each year with a regularly scheduled press conference, despite policymakers' insistence that every meeting is "live."

Now every meeting will be live, and just in time, too, as the Fed signals it is nearing the time when interest rates will be close to "neutral" and at a point where the Fed may be just as likely to lower rates as to raise them.

Holding press conferences at every meeting is an extension of years of increasing transparency at the Fed, which decades ago didn’t even issue a statement to describe its rate decision but relied instead on traders inferring it from the central bank's activities in open markets.

Back then, traders famously watched the size of Fed Chair Alan Greenspan’s briefcase for clues to whether the Fed would raise rates. In 1994, the Fed released its first post-meeting statement of less than 100 words; over the years it expanded its statement until its length reached a post-crisis zenith of more than 900 words. 

Under Fed Chair Janet Yellen, the Fed began trimming its statement dramatically, a trend continued by Powell since he took over this year.

Now he's set to add more words of explanation to each Fed rate decision, by way of a post-meeting press conference. For this week, however, enjoy the quiet.

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