The Fed May Have Included An Old Greenspan-Era Code In Its Announcement

Alan Greenspan George Bush

Photo: The White House

Contrary to some expectations, the Fed did nothing today. No more QE. No extension of the promise to keep rates super low.So what gives? Will the Fed soon do more? After all, the Fed is missing on its dual mandate of full employment and stable inflation.

But maybe there’s a hint of more action coming up…

The Federal Reserve could choose to ease monetary policy further before it meets in September, Global Head of Foreign Exchange, Rates and Commodities at TD Securities, Eric Green, says.

In a note issued to clients following today’s FOMC meeting, Green said the Fed’s wording mirrored that under Greenspan, and could indicate global coordinated easing is close. 

He writes:

Perhaps, but perhaps I have simply been doing this too long. Still, new wording stating that the Fed “will closely MONITOR incoming information….” was, under the Greenspan regime, code for watch out for possible inter-meeting ease. That does not mean an inter meeting ease is in the offing. It doesn’t mean it isn’t. But, it does indicate that the threshold to pulling the trigger for more easing is not only low, it could come even before the next meeting should it be necessary.

If so, then at face value it also raises the potential for a wider global coordinated policy response over coming weeks. Stay tuned….

SEE ALSO: The state of the global economy in one map >

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