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Why does the Fed write the way it does? First, this article buries the lede. The first seven sentences are framing. Only sentences 8-9 are actually news. The n

Why does the Fed write the way it does? First, this article buries the lede. The first seven sentences are framing. Only sentences 8-9 are actually news. The next four are, again, context. The headline also does not actually say what happened. Second, of the fourteen sentences here, a full six are trivially true -- "The Committee is highly attentive to inflation risks. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run." & everything from "The Committee is strongly committed to returning inflation to its 2 percent objective" through "The Committee's assessments will take into account a wide range of information". These are all obvious and don't add any actual information -- or maybe they do and it requires more cultural knowledge than I possess to read between the lines? Third, use of jargon, e.g. "Recent indicators of spending and production have softened". WTH does 'softened' mean? From context, I'm guessing it means "show evidence of decelerating growth." Why not just say that? Fourth, hyperlinks? references? Why not provide links to the economic data that's informing the decision? Molly Young has a great article called "Why do cdorporations speak the way they do?" [0] that provides a compelling account of exactly that. Do we have something similar for the Fed? Or for bureaucracies in general? [0] https://www.vulture.com/2020/02/spread-of-corporate-speak.html https://www.vulture.com/2020/02/spread-of-corporate-speak.ht...

genericresponse 4y ago
Because they aren't writing for a general audience. They're writing for an academic, professional finance, and governmental audience. It's extremely relevant that their word choice is being scrutinized for suggestions of what their future policy will be. Similarly, their use of jargon would be well understood by their audience. Context matters in communication. You could consider this almost ritualized. That's something very different than corporate doublespeak that seeks to obscure rather than inform.
lamontcg 4y ago
"Tell me you were too young to remember Alan Greenspan without telling me that" The Fed has always shied away from saying things too bluntly, and preferred to deal with wishy washy code words. If it ever says something bluntly you know they really mean it. Something like "softened" is a deliberately ambiguous phrase designed to acknowledge the reality that they're declining without causing panic, by being uncertain and sounding not terribly bad. You're supposed to wonder what that means and argue about it, so the markets don't bolt one way or the other. If you look up the history of Alan Greenspan ("The Maestro") and the way that investors in 2003 watched for the changes in single words from meeting to meeting from the Fed, so that he never startled the emotionally delicate markets you'll see there's a long history of this kind of language. Also it kind of scares the crap out of me that they're bumping rates by 75 basis points every meeting. If you understand how much Greenspan was walking on eggshells back in 2003, they're fucking screaming right now by their actions that they're going to plunge the economy into a recession in order to get wage growth and unionization under control.
- throwaway_4ever 4y ago
  Oil is down 20% from June, so it's likely we'll have somewhat tapered inflation next CPI. Current best estimate for FOMC meeting 6 weeks from now is a 50 bps raise, and then two more 25 bps raise to end the year at 3.25%. Sounds reasonable to me.
  - lamontcg 4y ago
    Over the course of 2 years from 2004 to 2006 the fed raised interest rates by 425bp which ultimately popped the housing bubble. In less than a year the Fed will have increased rates by 325bp in your scenario, and there's no indication by the Fed that they're going to slow down that much, and currently no indication that inflation will hit their 2% target rate. And they're more concerned with core CPI running around 6% than the price of food and energy, so oil coming off its highs doesn't actually mean that much to policy (and you can't even see the last commodities boom when oil went to $100/bbl in the core-CPI readings from that time -- the rise in oil prices didn't cause the core CPI increase, so falling oil prices won't reverse it). And I think the markets are underestimating how much they'll hike rates to close out the year. If core CPI remains elevated even as oil comes off its highs then they could at least do 3 more 50bp hikes to close out the year.
    - dragonwriter 4y ago
      > And they're more concerned with core CPI running around 6% than the price of food and energy, so oil coming off its highs doesn't actually mean that much to policy Energy, as well as being a CPI component itself, is a key production input and has outsize effects on prices across the board (though that effect is smoothed compared to immediate energy costs); if energy costs have peaked (and not just seeing a downward fluctuation over the last month or so), then that itself is going to be a huge brake on core inflation.
- pindab0ter 4y ago
  How does an interest increase influence unionization?
staticman2 4y ago
Second, of the fourteen sentences here, a full six are trivially true None of those things are trivially true to people who regularly post contrarian and/or conspiracy theory takes about the fed on this very web site. It makes sense for the fed to restate these "trivial" matters rather than ceding the discussion to "alternative" facts spread by contrarians.
- setgree 4y ago
  I meant that they are trivially true in the sense that they, e.g., * restate the fed's mandate to keep to full employment * say that the fed will consult many sources when it makes its verdicts (I should hope so!!) * say that their verdict might change if they get new input or new guidance Surely even a true dissident on monetary matters would still acknowledge that the fed's mandate says what it says?
  - staticman2 4y ago
    Here's an example of what I mean. The article states "The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run." Someone on this thread stated the interests rates are actually being raised because the committee seeks to crush unions. So if that "obvious" sentence was removed I'd only be hearing one side of the story if I read the poster's take and the attached press release.
    - setgree 4y ago
      Ah so this might be non-obvious context — the fed’s mandate is 1) maximum employment and 2) stable prices, which the Fed has, historically, defined as 2%. So saying this in the press release is basically like if i restated my company’s publicly known OKRs every time I made an announcement. More on the mandate: https://www.brookings.edu/blog/up-front/2022/02/23/how-does-the-fed-define-maximum-employment/amp/ https://www.brookings.edu/blog/up-front/2022/02/23/how-does-...

genericresponse 4y ago

Because they aren't writing for a general audience. They're writing for an academic, professional finance, and governmental audience. It's extremely relevant that their word choice is being scrutinized for suggestions of what their future policy will be. Similarly, their use of jargon would be well understood by their audience. Context matters in communication. You could consider this almost ritualized. That's something very different than corporate doublespeak that seeks to obscure rather than inform.

lamontcg 4y ago

"Tell me you were too young to remember Alan Greenspan without telling me that" The Fed has always shied away from saying things too bluntly, and preferred to deal with wishy washy code words. If it ever says something bluntly you know they really mean it. Something like "softened" is a deliberately ambiguous phrase designed to acknowledge the reality that they're declining without causing panic, by being uncertain and sounding not terribly bad. You're supposed to wonder what that means and argue about it, so the markets don't bolt one way or the other. If you look up the history of Alan Greenspan ("The Maestro") and the way that investors in 2003 watched for the changes in single words from meeting to meeting from the Fed, so that he never startled the emotionally delicate markets you'll see there's a long history of this kind of language. Also it kind of scares the crap out of me that they're bumping rates by 75 basis points every meeting. If you understand how much Greenspan was walking on eggshells back in 2003, they're fucking screaming right now by their actions that they're going to plunge the economy into a recession in order to get wage growth and unionization under control.

throwaway_4ever 4y ago
Oil is down 20% from June, so it's likely we'll have somewhat tapered inflation next CPI. Current best estimate for FOMC meeting 6 weeks from now is a 50 bps raise, and then two more 25 bps raise to end the year at 3.25%. Sounds reasonable to me.
- lamontcg 4y ago
  Over the course of 2 years from 2004 to 2006 the fed raised interest rates by 425bp which ultimately popped the housing bubble. In less than a year the Fed will have increased rates by 325bp in your scenario, and there's no indication by the Fed that they're going to slow down that much, and currently no indication that inflation will hit their 2% target rate. And they're more concerned with core CPI running around 6% than the price of food and energy, so oil coming off its highs doesn't actually mean that much to policy (and you can't even see the last commodities boom when oil went to $100/bbl in the core-CPI readings from that time -- the rise in oil prices didn't cause the core CPI increase, so falling oil prices won't reverse it). And I think the markets are underestimating how much they'll hike rates to close out the year. If core CPI remains elevated even as oil comes off its highs then they could at least do 3 more 50bp hikes to close out the year.
  - dragonwriter 4y ago
    > And they're more concerned with core CPI running around 6% than the price of food and energy, so oil coming off its highs doesn't actually mean that much to policy Energy, as well as being a CPI component itself, is a key production input and has outsize effects on prices across the board (though that effect is smoothed compared to immediate energy costs); if energy costs have peaked (and not just seeing a downward fluctuation over the last month or so), then that itself is going to be a huge brake on core inflation.
pindab0ter 4y ago
How does an interest increase influence unionization?

staticman2 4y ago

Second, of the fourteen sentences here, a full six are trivially true None of those things are trivially true to people who regularly post contrarian and/or conspiracy theory takes about the fed on this very web site. It makes sense for the fed to restate these "trivial" matters rather than ceding the discussion to "alternative" facts spread by contrarians.

setgree 4y ago
I meant that they are trivially true in the sense that they, e.g., * restate the fed's mandate to keep to full employment * say that the fed will consult many sources when it makes its verdicts (I should hope so!!) * say that their verdict might change if they get new input or new guidance Surely even a true dissident on monetary matters would still acknowledge that the fed's mandate says what it says?
- staticman2 4y ago
  Here's an example of what I mean. The article states "The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run." Someone on this thread stated the interests rates are actually being raised because the committee seeks to crush unions. So if that "obvious" sentence was removed I'd only be hearing one side of the story if I read the poster's take and the attached press release.
  - setgree 4y ago
    Ah so this might be non-obvious context — the fed’s mandate is 1) maximum employment and 2) stable prices, which the Fed has, historically, defined as 2%. So saying this in the press release is basically like if i restated my company’s publicly known OKRs every time I made an announcement. More on the mandate: https://www.brookings.edu/blog/up-front/2022/02/23/how-does-the-fed-define-maximum-employment/amp/ https://www.brookings.edu/blog/up-front/2022/02/23/how-does-...