Is a Fed Rate Pause Coming? Watch These Words
The central bank will most likely signal its intentions with a small tweak to its statement language.
Words matter.
Photographer: Alex Wong/Getty Images
The Federal Reserve speaks a bizarre language, and the difference between a “hawkish” post-meeting statement and a “dovish” one can boil down to a single tweaked word. Investors looking for signs that a “pause” in interest-rate increases is truly here would do well to keep a close eye on any changes to one key sentence when the central bank renders its decision on Wednesday.
Of course, the main development after the Fed’s last meeting was that policymakers seemed to leave the door open to a possible end to increases — not imminently but at some point in the future. To realize that, you had to catch a nuanced evolution in the March 22 statement from the one issued seven weeks earlier on Feb. 1. Specifically, the Fed’s post-meeting written statement went from this (in the third paragraph):