WASHINGTON (Reuters) - Understanding central banks is often compared to reading tea leaves: picking up on subtle clues that point in one direction or another.
For a while on Wednesday afternoon reporters and investors did just that, as they parsed the Federal Reserve’s statement describing a widely expected decision to cut interest rates for the third time this year.
The Fed would monitor incoming data “as it assesses the appropriate path” of its target interest rate, the statement said, a softer version of a promise the Fed had been making for months to “act as appropriate” on monetary policy.
Investors and reporters alike interpreted the shift as a hint the Fed was ready to pause.
Then, a few minutes into his press conference, Fed Chair Jerome Powell signaled he was done with hinting.
Leaving rates where they are now, he told the roomful of reporters in remarks also carried live on the internet, is “likely to remain appropriate” unless there is a “material reassessment” of the Fed’s outlook for moderate growth, a strong jobs market, and healthier inflation.
Powell’s statement was definitive: the Fed was leaving rates on hold unless something really bad happened.
And then came the questions.
“Not to make light of it but I am a little bit — I wonder if you could help me out with the appropriate understanding of the word appropriate,” CNBC’s Steve Liesman asked.
Powell responded, exactly repeating the phrases he had used earlier, as if to underscore that, like the statement the Fed issued earlier, he was sticking to script.
“So we think that the current stance of policy is likely to remain appropriate, likely to remain appropriate, as long as incoming information about the economy is broadly consistent with our outlook,” he said.
Liesman persisted: “Why isn’t the phrase ‘likely to remain appropriate’ in the statement if that’s the sense of the committee?”
Powell has built his reputation since taking the helm of the central bank last February on being plainspoken. Central banks have built their reputations largely on being a bit harder to read.
“Well,” he said, “there’s a lot of practice and science and history in terms of how much you put in the actual post-meeting statement as opposed to what we say in the press conference statement. It’s, uh ... you know, it’s a judgment call. I am saying it now, so ...” he said, trailing off.
And it was on to the next question.
Reporting by Lindsay Dunsmuir; Editing by Tom Brown