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17 Jul 2013
Flash: Bernanke departs from norm in anticipated Fed speech – Westpac
FXstreet.com (New York) - Market anticipation could scarcely be higher for what is presumably Fed chairman Bernanke’s final semi-annual testimony to Congress Wednesday (House) and Thursday (Senate), suggests Global FX Strategist Sean Callow at Westpac.
In a break with tradition, his prepared text will be released at 8:30am NY time, 90 minutes ahead of the usual 10:00am slot when he begins to read from the text. The Q&A session that follows usually will run for at least 2 hours so it is a long day of Fedspeak. After last week’s surprisingly dovish tone (Fed is failing on both its full employment and 2% inflation mandates), it is hard to be confident what message Bernanke will push.
According to Callow, “Our inclination is that he will deliver a view along the lines of the 19 June press conference, where he said that if the economy improved as the FOMC expected (including an uptick in inflation), then the Fed was likely to commence reducing QE later this year, completing the process by mid-2014.” At this point however, Bernanke stresses, monetary policy would still be very generous and the funds rate was not likely to be raised until considerably later.
In a break with tradition, his prepared text will be released at 8:30am NY time, 90 minutes ahead of the usual 10:00am slot when he begins to read from the text. The Q&A session that follows usually will run for at least 2 hours so it is a long day of Fedspeak. After last week’s surprisingly dovish tone (Fed is failing on both its full employment and 2% inflation mandates), it is hard to be confident what message Bernanke will push.
According to Callow, “Our inclination is that he will deliver a view along the lines of the 19 June press conference, where he said that if the economy improved as the FOMC expected (including an uptick in inflation), then the Fed was likely to commence reducing QE later this year, completing the process by mid-2014.” At this point however, Bernanke stresses, monetary policy would still be very generous and the funds rate was not likely to be raised until considerably later.