The Week Ahead: Yellen must walk a verbal tightrope

March 15, 2014 

Janet Yellen sat second chair at the Federal Reserve for four years. On Wednesday, she orchestrates her first interest-rate meeting as chairman of the central bank. And most expect her to continue singing from the same song book, even though a few notes will have to change.

The Federal Open Market Committee meetings held every six weeks have become exercises in the obvious and undeniable. This is just what the Fed wants. Last May, then-Chairman Ben Bernanke told Congress the agency might reduce its practice of buying bonds to hold down long-term interest rates. It wasn't until January when that was put into practice.

The new chairman's communications conundrum is concentrated on the job market. For more than two years, the committee has stipulated that it would keep the federal funds target rate close to

zero as long as unemployment remained above 6.5 percent. It was 6.7 percent in February. There's not much room left before the committee's self-imposed threshold is met.

Yet few people, including members of the Federal Reserve, argue the job market and economy are strong enough to withstand higher borrowing rates. Instead, the new chairman will have to adjust jargon to fit the data while reassuring investors and the Fed's congressional critics that the bank is not playing musical chairs with its strategy.

Tom Hudson, financial journalist, hosts "The Sunshine Economy" on WLRN-FM in Miami, where he is the vice president of news. He is the former co-anchor and managing editor of "Nightly Business Report" on public television. Follow him on Twitter HudsonsView.

Bradenton Herald is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service