Institutional analyst Jersey says the official appears committed to weakening
the Fed's recent forward guidance. Market takeaway: a weaker guidance regime
raises the odds of more frequent Fed surprises — even though the official told
reporters in June he wants markets to guide policy — because an information
vacuum in the Fed's reaction function increases the chance the Fed will act
contrary to market pricing. Jersey cites September 2015, when markets had priced
in an over 90% chance of a hike but the Fed held off amid other currencies'
depreciation, as a precedent.
