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Would a Fed Rate Hike Surprise Really Matter?
Friday, May 15, 2015
Any change in interest rates will be sprung on the markets
if John Williams, Federal Reserve Bank of San Francisco president, gets his
way. While we suspect that any shock
value surrounding this particular event would be moot, Williams told CNBC this
week that "My personal preference is that we don't have the most
telegraphed policy decisions in history, as we did in 2004." He added "You don't want to make a
decision two months or three months in advance."
While it appeared unrelated to William's remark, Wells Fargo
Bank just released the first in a series of articles which seek to quantify the
expected reaction of a fed funds rate shock on several different markets. The
bank cites the example of then Fed chairman Ben Bernanke's comments in the
summer of 2013 which caused investors to revise their expectations about the Feds
monetary policy and rates and led to the so-called "taper tantrum".
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