Kevin Warsh Makes Small but Important Changes at the Fed.
Here’s Why They Could Result in Significant Volatility Around Future FOMC Meetings Kevin Warsh recently held his first Federal Open Market Committee (FOMC) meeting as Federal Reserve Chairman
While all eyes were on what would happen to interest rates (they remained unchanged), the bigger takeaway for investors is what changed in the Fed’s overall approach to announcing its decisions, as that could have a more significant effect on the market this year. There are a couple of key changes that are worth noting, because while they seem modest, they could have significant ramifications for the S&P 500 (SNPINDEX: ^GSPC) and how it performs in the future. Guidance has been removed, and policy statements are shortened As is often the case when companies report earnings, what’s crucial for investors is the guidance and anticipating what might happen in the future.
But under Warsh, the Fed will keep its cards close to its chest, and there will no longer be any forward guidance. And its policy statement will also be simplified and more brief, now around 130 words versus the 300-plus words it was before. While these don’t sound like earth-shattering changes, they give investors and analysts less information.