There’s a confluence of circumstances that are likely to keep Fed officials from making too much public comment in the next couple of weeks.
First, it is normal for the number of Fed speakers to decline in advance of a holiday. While not a federal observance, Good Friday on April 10 and the Easter weekend tend to be a quieter period for official comment. The quiet tends to stretch early into the next week as Easter Monday is also a holiday in many places.
Second, the communications blackout period around the April 28-29 will go into effect at midnight on Saturday, April 18 and run through midnight on Thursday, April 30. The approach of the blackout usually signals a busy calendar as Fed officials take the opportunity to lay out their respective thoughts on monetary.
However, the third circumstance is the extraordinary measures taken to combat the spread of COVID-19 and the uncertainties of the present outlook. While policymakers are perfectly well able to communicate via digital media, most will hesitate to do more than offer assurances that the Fed is monitoring the situation carefully and will respond as needed in conjunction with fiscal authorities in the US, and by coordinating with other central banks where appropriate. There are too many unknowns to make more than general and sketchy forecasts about the economy. The FOMC did not prepare its quarterly Summary of Economic Projections (SEP) for its March deliberations for this very reason. It won’t be updated until the June 9-10 meeting when the situation should be clearer.
I note two items on the upcoming Brookings calendar that may provide some guidance for the near term.
On Tuesday, April 7 at 13:00 ET, former Fed Chair Ben Bernanke will hold a webinar on the economic response to COVID-19. His experience of markets and the economy during the last financial crisis and Great Recession, as well as his expertise in the Great Recession are going to be invaluable in understanding what to do in the present.
On Thursday, April 9 at 10:00 ET, current Fed Chair Jerome Powell will speak in a webinar about COVID-19 and the economy. Powell speaks for the FOMC as a whole and this could well be the last major comments on the topic before the communications blackout period unless there is a critical development – a not remote possibility. As the FOMC’s spokesman, Powell will likely emphasize that right now the Fed is more in damage control mode trying to keep markets operating and ensuring the financial system can meet the crisis than it is trying to provide stimulus. He will highlight the steps taken so far and perhaps give some indication as to what may yet be done within the limits of the Fed’s legal authority. I would anticipate he will be vague about what the next steps for interest rate policy might be. He will almost certainly be asked about negative rates, and just as almost certainly will refer back to previous FOMC discussions that suggest this is unsuitable for the US.
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