U.S. Policy Makers Are Treading Carefully: Wraith

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April 10 (Bloomberg) –- BofA Merrill Lynch Fixed Income Strategist John Wraith discusses the Fed Minutes and how they’re playing down their own forecasts with Anna Edwards and Mark Barton on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

Joining us.

-- our guest is joining us.

Quite confusing.

The dots have been an important part of the fed's communication strategy for the past couple of years since they introduced them.

Obviously the ideas to try to guide the market not just what is happening now but where things will be over the next couple of years.

When you see that sort of congregation of dots around certain levels, the market is entitled to believe that is where the fed things they are going.

To then be told you should overlook them is slightly puzzling.

If these are the parts, how can some of those parts not add up to the overall message?

This is more about putting across the view that this is where re-think rates might be going, based on our current outlook for the economy.

That may prove to be too optimistic.

It is just a reminder that they intend to air on the side of trading very carefully.

If they have any doubt at all about whether the economy is ready for a rate hike, they will back away from it.

That is the way the reaction function has been involved in.

Next the other thing that confused many was the part that rates remain low for a considerable time after the asset her kisses.

Janet yellen suggest -- after the asset her kisses in did.

-- after the asset purchases in did.

Quick six months was stated in a way that it was supposed to mean is not coming for a while.

When you come up with anything as specific as that, it tends to focus in on it.

This is a way of de-stressing the market to saying we will carefully continue with asset purchase slowdown.

When that stops, we will reconsider and think again.

They have deliberately taken out that time contingent guidance because they want the data to decide for them.

This is evidence that the central banks are feeling their way in the dark feed they don't know how much damage has been done by the crisis over the past six or seven years.

In terms of capacity, they think there is still plenty, but they don't want to commit to that, so they are watching everything very carefully.

The fact is inflation is continuing to slow down, and that is nothing evidence for central bankers that there is no need for them to dark tightening anytime soon.

If there is no inflationary pressures, which seems to be that case, it tells you there is some slack.

One of your colleagues talks about confirmation from the condition that is they are insisting inflation will rise, when actually it is ending.

Is that really the case?

There is a concern that in all the major economies, inflation is the low target.

Most of them tend to try to get inflation, there is evidence of demand perhaps being soft.

If you look at the demand for chinese trade overnight, for example, we will talk it up.

We will talk about the bank

This text has been automatically generated. It may not be 100% accurate.


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