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Janet Yellen's Rookie Mistake: Speaking Too Clearly

Janet Yellen, chair of the U.S. Federal Reserve, speaks during a news conference following a Federal Open Market Committee meeting in Washington on March 19
Janet Yellen, chair of the U.S. Federal Reserve, speaks during a news conference following a Federal Open Market Committee meeting in Washington on March 19Photograph by Andrew Harrer/Bloomberg

Janet Yellen may have just committed the first substantial blunder of her chairmanship of the Federal Reserve. The mistake: being specific when the occasion called for generality. “The more experienced [Ben] Bernanke knew to avoid clarifying deliberately vague statement language,” Michael Feroli, chief U.S. economist at JPMorgan Chase, wrote in a client note after the financial markets reacted badly.

Investors are dying to know when the Federal Reserve will start raising its target for the federal funds rate, which has been stuck on the floor at zero percent to 0.25 percent since December 2008. The Fed has repeatedly refused to be pinned down. In its statement today, for example, the rate-setting Federal Open Market Committee (FOMC) said “it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends [emphasis added].”