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May 1, 2006
Not your everyday "Fed speak"
Read CNBC's version--after all, they are part of the story...
Federal Reserve Chairman Ben Bernanke -- via CNBC's Maria Bartiromo -- managed to shock the financial markets into a pullback this afternoon.
Bartiromo, on CNBC's "Closing Bell," said the Fed boss told her at the White House Correspondents Dinner on Saturday night that the markets misunderstood him last week to say the Fed is done raising interest rates.
Bernanke told Bartiromo he found it "worrisome" that anyone would think of him as dovish. He said that he and members of the Federal Open Market Committee, the Fed's rate-setting body -- were trying to create flexibility so the Fed can choose whether to rates or not.
See also: Calculated Risk and Big Picture.
Vindication is always nice. I said last week, among other things, that Bernanke's comments were "necessary...but not sufficient" for a pause. I think the market overreacted and today they got their hand slapped. Dave Altig's probability charts are probably getting whiplash, but such is life on the knife's edge.
As for Bernanke giving an exclusive market moving story to Bartiromo--and let's be honest, that's what it was--I'm not crazy about that at all. That's about all there is to say about it.
Posted by William Polley at May 1, 2006 4:03 PM
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Comments
Professor, This video of Maria's comments is worth watching: http://msnbc.msn.com/id/3683270/
After Maria Bartiromo dropped her bombshell, the pits behind her at the Merc got so loud, Maria commented:
"Seems like something is going on behind us...all of a sudden" (about 4 minutes into tape)
I don't think Maria had a clue about the impact of what she said. That makes me wonder about this story.
On the FED, I agreed with your assessment - so many articles and market participants did "get it wrong".
Best Wishes.
Posted by: CalculatedRisk at May 2, 2006 12:01 AM
Perhaps Bernanke hasn’t realized yet how careful he has to be about what he says, to whom he says it, and under what circumstances. It wasn’t so much an issue for Greenspan because nobody understood what he was saying anyhow.
Posted by: knzn at May 2, 2006 9:27 AM