It seems the whole world is nervously waiting for tomorrow's speech from Janet Yellen, the chair of Federal Reserve. This over-hyped event has no chance of living up to expectations.
The official subject of the talk is the tools of monetary policy. Yellen could shock the world by sticking to the topic and dryly explaining what all the tools are, but she will no doubt throw some bones at the crowd and give some hints to the future. However, a hint from Yellen is more of a tease. On several occasions, Yellen has given speeches that set up a tightening, but then she finds reasons to stand pat.
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I don’t know what traders expect Yellen to say. She has said it all. Job growth is good, inflation is low but moving toward the Fed’s goal, global risks remain, and the Fed will proceed with caution.
I doubt Yellen varies from this script. I'd like to see a shocker to shake up the markets and make writing more interesting, but I’ve set my expectations low.
Dwight Johnston is the chief economist of the California and Nevada Credit Union Leagues and president of Dwight Johnston Economics. He is the author of a popular commentary site and is a frequent speaker at credit union board planning sessions and industry conferences.