Fed Tests Ability to Hold Telephone Press Conference

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The Federal Reserve held a conference call for the media on Wednesday, testing a capability cited by Chair Janet Yellen during a session with the press last month.

While the event could serve as a reminder to financial markets that interest-rate moves won’t necessarily coincide with Yellen’s quarterly press conferences, a Fed Board spokeswoman said the test wasn’t signaling any planned future action by the policy-making Federal Open Market Committee.

The call was “simply a test of our technical capabilities,” spokeswoman Michelle Smith said on the call.

Yellen holds a press conference after every other FOMC meeting in Washington. Her predecessor, Ben S. Bernanke, began the practice in 2011, and the Fed hasn’t moved rates in that time.

“Yellen keeps saying every meeting is live. Today they are going a step further,” said Thomas Costerg, an economist at Standard Chartered Bank in New York. “The market may revisit the assumption that the hike will only be when there is a press conference.”

Yellen said during her March press conference that rate decisions wouldn’t be limited by the press conference schedule.

“Every meeting that the Federal Open Market Committee has is a live meeting at which we could make a decision,” Yellen said during her March 18 press conference. “We have long had the capacity to call a press conference after a meeting that we would hold by teleconference. It is something that remains a capacity we have and would expect to use if it were necessary.”

Fed officials have said they are likely to raise rates some time this year.

Bounce Back

Earlier on Wednesday the FOMC left rates unchanged near zero while saying policy makers expect the economy to bounce back from a first quarter in which growth ground to a virtual halt. Yellen didn’t hold a press conference.

Economists weren’t convinced the Fed would finally lift rates and explain themselves via teleconference.

“Because this is going to be such an important event, ending six and half years at zero, they’re going to want to explain themselves,” said Carl Tannenbaum, chief economist at Chicago-based Northern Trust Corp. “They’ll want to have Janet out there.”

In a Bloomberg survey last week, 73 percent of economists polled said they expected a rate rise in September and 10 percent in June. Both meetings are scheduled to be followed by a press conference. Just 5 percent saw a move at the non-press conference meetings in July and October. None predicted a move in December, when Yellen is also scheduled to speak to the media.

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