A reader of my blog pointed out this article to me titled “When the Fed says X, they really mean Y” and he thought the readers of my blog might find it interesting.
The Fed typically convenes every month to discuss interest rates. It is not only the action (whether rates are raised, lowered, or held constant), but also the accompanying “statement” which is of interest to investors and analysts. In its statement, the Fed may signal both its motivation for the current policy decision as well as offering clues towards the future direction of rates. Unfortunately, the Fed often couches its commentary in vague language and specialized terminology, which may be difficult for amateur traders and investors to understand. The following is designed as a handy translation guide for people who wish to read and understand the Fed Statement but don’t want to train for a PhD in economics
It reminded me of the pretty widely discussed speechby Bernanke in 2004 on Fedspeak. Off course, there are little similarities.