{"id":48846,"date":"2014-03-23T18:50:03","date_gmt":"2014-03-23T22:50:03","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=48846"},"modified":"2014-03-23T18:50:04","modified_gmt":"2014-03-23T22:50:04","slug":"monetary-policy-week-in-review-mar-17-21-2014-vietnam-cuts-rate-yellen-learns-the-power-of-her-words","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2014\/03\/23\/monetary-policy-week-in-review-mar-17-21-2014-vietnam-cuts-rate-yellen-learns-the-power-of-her-words\/","title":{"rendered":"Monetary Policy Week in Review \u2013 Mar 17-21, 2014: Vietnam cuts rate, Yellen learns the power of her words"},"content":{"rendered":"

By CentralBankNews.info<\/u><\/a>
\n    Seven central banks maintained their policy rates last week while Vietnam cut its rate as Janet Yellen, the new chair of the U.S. Federal Reserve, learned how every single word she utters has the power to move markets via trigger-happy news media.
    As her predecessor Ben Bernanke learned after chatting to CNBC\u2019s Maria Bartiromo three months after taking over from Alan Greenspan in 2006, every single word from a Fed chair has to be scrutinized and weighed for its potential impact on jittery financial markets. There is no room for subtle points or thinking out loud.
    Although Yellen on several occasions during her first press conference on Wednesday said the Fed\u2019s new guidance did not \u201cindicate any change in the Committee\u2019s policy intentions,\u201d this point went out the window when she tried to explain what the Fed meant by \u201ca considerable period.\u201d
    In its new guidance, the Fed, like the Bank of England last month, ditched unemployment as a simplistic threshold for changing policy in favor of a broader range of indicators that can give policymakers a fuller understanding of the slack in the labor market and inflationary or deflationary pressures.
    In its statement, the Fed\u2019s policy-making body, the Federal Open Market Committee (FOMC), said the fed funds rate will likely be maintained at the current level for \u201ca considerable time after the asset purchase program ends\u201d especially if inflation is below the Fed’s 2.0 percent goal.
    As any good journalist, a Reuters reporter quizzed Yellen on how long the gap could be between the ending of the Fed’s asset purchase program sometime in the fall of 2014 and a rate rise.
    Yellen took the bait.
    \u201cBut, you know, (that) probably means something on the order of around six months or that type of thing,\u201d Yellen said.
    It was a dream come true for journalists. The headline and the story was served on a silver platter. The message that the Fed was likely to raise rates in the first half of 2015 was instantaneously flashed to financial markets across the world.
    Yellen\u2019s context for her statement and clarification that any decision to raise rates would depend on the condition of the labor market and inflation was lost in the shuffle as global stock and bond markets dropped in anticipation of a rate rise in April 2015, some three months earlier than expected.
    In the days following what will likely become known as Yellen\u2019s rookie mistake, her Fed colleagues did their best to explain that financial markets overreacted to her statement and she was not signaling a more restrictive policy stance.
    Yellen has not spoken in public since the press conference.
   
    Through the first 12 weeks of this year<\/b>, rates have been cut 14 times, or 13 percent of this year\u2019s 108 monetary policy decisions by the 90 central banks followed by Central Bank News, steady from the previous week but down from 14 percent at the end of February.
    Rates have been raised 10 times, or 9.3 percent of this year\u2019s policy decisions, down from 10 percent the previous week and 10 percent at the end of February.<\/p>\n

LIST OF LAST WEEK\u2019S CENTRAL BANK DECISIONS<\/span><\/b>:<\/b><\/span><\/div>\n
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