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America's central bank has been preparing markets for months for drawdowns in its programme of stimulative asset purchases, despite criticism that such a "tapering" was premature amid weak employment growth and below-target inflation.
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Nothing in its earlier announcements had prepared markets for the move.
"History suggests that waiting too long to acknowledge the economy's progress and prepare markets for more normal policy settings carries no less risk than tightening too soon," Ms. George was to say in the speech in Santa Fe, N.M.
The Fed hoped to calm debate over its next move and prepare markets for the likelihood that it would pour money into the economy by resuming purchases of government, and possibly private, debt.
In essence they are amalgams of all the murky, unquantifiable factors traders study in their perpetual search for mispriced markets.When the Fed set out to prepare markets for a slowing in the pace of QE in May, it assumed that because it was not altering its guidance of when it would raise short-term rates, bond yields would only back up a bit.
The recent menaces seem designed to achieve two goals: to exert pressure on Greeks to support more mainstream parties in a likely second election, and to prepare markets for the likelihood of Greece's departure if radicals are returned.For now, attention turns to tonight's much-awaited meeting in Berlin between the new French president, François Hollande, and Angela Merkel, the German chancellor.
In what appeared to be an effort to prepare markets for higher rates as early as this summer, the Federal Open Market Committee, which sets monetary policy, said in a statement that it "believes that policy accommodation can be removed at a pace that is likely to be measured".
"While economic data improved over the last month, everyone was focused on Brexit [the British vote to exit the European Union], and the Fed would need to prepare markets for any hike".
While Fed-watchers are hard-pressed to see a turning point at the bank's June policy meeting, there are plenty of other spots this summer when the Fed could start to prepare markets for change.
Greg Heym, an economist at Terra Holdings, who prepares market reports for Brown Harris Stevens and Halstead Property, said the city's tabulation of market prices follows the same trends as his own reports.
The Fed's leaders are now preparing the markets for a resumption.
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