What good is transparency if the future’s unclear? Not much if you’re turning over stones in the bond market in search of clues about what’s coming.
Fed Chairman Ben Bernanke has been warning that the central bank is more or less making monetary policy on the fly these days. As new numbers on the economy come in, the Fed will adjust its monetary prescription accordingly. Gee, thanks.
If it’s not already obvious that ours is a great moment of transition, Bernanke reminded everyone of this fact in his testimony yesterday to the Senate Banking Committee. On the subject of the next interest-rate meeting on June 28-29, he advised that “we have about a month to go before the next FOMC meeting and a lot of data between now and then. We will be watching that data very carefully,” reports Reuters. In other words, the Fed may hike rates but perhaps it won’t.