The Federal Reserve has had a tough two days communicating its policies to the public and risking confusing market participants before a critical July 31 meeting where the central bank could deliver the first rate cut for over 1
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "On Thursday, the New York Fed had President John Williams markets dances after making remarks comparing monetary easing to getting a vaccination and saying it "pays off to act quickly to lower prices at the first sign of economic distress." His remarks was focused on how monetary policy decisions differ when interest rates are near zero (Federal Fund rate is currently within a target range of 2.25% to 2.5%). "Data Reaction Time =" 16 "> On Thursday, New York Fed President John Williams markets dancing after making remarks compared to easing monetary policy to get a vaccination, saying it "pays to act quickly to lower prices at the first sign of financial distress." was focused on how monetary policy decisions e are different when interest rates are close to zero (Federal Fund rate is currently within a target range of 2.25% to 2.5%).
"It is better to take preventive measures than to wait for disaster to unfold," Williams said.
Investors interpreted his remarks which signal a more dramatic interest rate cut in the next Federal Open Market Committee meeting on July 31. The effort on a 50 basis point reduction increased in the Fed funds futures markets, and the New York Fed followed up with an unusual clarification on Williams speech.
"This was an academic talk about 20 years of research," a New York Fed spokesman said in a statement sent to journalists. "It was not about possible political measures at the forthcoming FOMC meeting."
On Friday, St. Louis Fed President James Bullard (a voter member of this year's FOMC) said he was sitting on the cover of this speech and sitting with Explanation.
"My interpretation was that he was talking about his previous research," Bullard said.
From Saturday, federal decision-makers begin to make public comments before July 31, as part of the normal "Blackout" protocol ahead of FOMC meetings.
<h2 class = "canvas-atom canvas text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content Misread or misspeak? "data-reactid =" 34 "> Misread or misspeak?
<p class =" canvas-atom canvas text Mb (1.0em) Mb) – Smith (0.8em) – sm "type =" text "content =" Following Williams's comment, the Fed funds raised futures contracts with a 50 basis point reduction to approx. 60%, with a 40% chance of a 25 basis point cut. Williams commented along with the Fed Vice Chairman Richard Clarida's comment & nbsp; says the Fed doesn't "have to wait until things get so bad to have a dramatic range of price reductions." "data-response time =" 35> After Williams & # 39; remarks, the Fed funds increased futures contracts by a 50 basis point reduction to approx. 60%, with a 40% chance of a 25 basis point cut. William's comments came with comments from Fed Chairman Richard Clarida who said: "The Fed shouldn't" wait until things get so bad to have a dramatic series of price reductions. "
When the New York Fed issued its clarification, the odds for a 50 basis point cut down to 22.5 increased
Bank of America Merrill Lynch described Fedspeak as a "head fake."
"In other words, Williams misunderstood the unintentional markets," wrote Bank of America's Michelle Meyer. "We believe that the NY Fed had no choice but to issue a press release given that the Fed's blackout period starts on July 20."
But the comments got the attention of President Donald Trump, who said William's remarks were " 100% correct when the Fed "got up too fast and too early."  I like the New York Fed President John Williams first sentence much better than his others. His first statement is 100% correct by the Fed "getting" too fast and too early. Also must stop the crazy quantitative tightening. We are in a world competition and win big, …
– Donald J. Trump (@realDonaldTrump) July 19, 2019
…. But there is no thank you to the Federal Reserve, had they not acted so fast and "so much", we would do even better than we do right now, this is our chance to build unsurpassed prosperity and success for the US, GROWTH, as in would greatly reduce% debt. Don't blow it!
– Donald J. Trump (@realDona ldTrump) July 19, 2019
New York Fed refused to comment on the president's tweets.
Ken Matheny, a CEO and Fed Monitor for Macroeconomic Advisers, told Yahoo Finance that Trump's rewrite was a "complete error message" of what Williams was trying to say. Williams's reactions are reflected in his research into responding to "unfavorable" economic developments with prices close to zero.
With stronger data coming in since the June meeting, the Fed doesn't seem to get "negative" readings on the economy.
Bullard, who was perceived as one of the more stupid members of the Fed, said he saw the case for a 25 basis point cut in the July 31 meeting, not an average of 50 basis points.
Following the New York Fed Clarification, Wells Fargo, Bank of America and ING all said they were expecting a 25 basis point cut in the next meeting.
Matheny said that William's remarks were a "minor bruise" and added that he should have made it clear that his remarks were in strict connection with academic research.
"It was absolutely a mistake," Matheny said.
<p class = "canvas competence textile Mb (1.0em) Mb (0) –sm Mt (0.8em) – sm" type = "text" content = " Brian Cheung is a reporter covering the banking industry and inter part of finance and politics for Yahoo Finance. You can follow him on Twitter @ bcheungz . "data-response time =" 55 "> Brian Cheung is a Reporter covering the banking industry and the cross between finance and politics for Yahoo Finance. You can follow him on Twitter @ bcheungz .
<p class = "canvas-atom teacher-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " Read the latest economic and business news from Yahoo Finance  "data-reactid =" 63 "> Read the latest economic and business news from Yahoo Finance
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