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Chairman: Treasury yields rose materially between meetings, markets reacting to real-time data
Summary
The chairman said nominal and real Treasury yields rose materially in the intermeeting period and credited market reaction to incoming information and reduced forward guidance for the change; he called the development "a change for the better."
The chairman told reporters that nominal and real yields across the Treasury curve increased materially in the 42 days since the last Federal Open Market Committee meeting.
"Some of the increases in market interest rates between FOMC meetings are among the most significant in the last two decades," he said, adding that market prices are responding directly to incoming information. He said the reduction in forward guidance may have been a factor and that the committee sought an "unfiltered message from markets."
He described this market behavior as constructive for policymaking and said the Fed will watch how market prices respond to incoming events to inform future decisions. The chairman cautioned, however, that interpreting markets is imperfect and that market signals are one of several inputs into policy judgments.
Provenance: topicintro SEG 055, topfinish SEG 076.
