A couple of weeks ago Janet Yellen, the new Chairwoman of the Federal Reserve Bank, took part in her first post-FOMC (Federal Open Market Committee) meeting press conference (see "On the Future of Monetary Policy"). While the average person on the street would have likely given her decent marks for dealing with the press on the black art of monetary policy in the U.S., folks on Wall Street did not judge her so kindly given the loud cacophony of complaints that ensued immediately after the event. Most of the heckling involved the reduction in transparency relating to the job market in America and her choice of the “around six months” preposition to describe on the fly when the Fed may begin to raise interest rates after the end of its quantitative easing program (currently scheduled for late this year).
Fast forward to this week and we find out that Janet Yellen is a quick learner. In a presentation aptly titled “What the Federal Reserve Is Doing to Promote a Stronger Job Market,” she delivered what some are calling the most “dovish” (i.e., less willing to raise interest rates; vs. “hawkish”) speech she has given to date.
The content on the speech turned out to have a number of dovish elements to it and was perhaps useful in highlighting Yellen’s own biases relative to those of the other members of the committee. She made direct points throughout the speech that talked down the “around six months” comment by indicating a number of times “the U.S. economy is still considerably short of the two goals assigned to the Federal Reserve by the Congress” and noting that “the recovery still feels like a recession to many Americans, and it also looks that way in some economic statistics.”
Perhaps Yellen learned her lesson, but Wall Street cheered…for now.