After plowing through 40 laborious pages of "dusty prose" from two central banks--the Fed 21 pages and the ECB 19--one can offer a serious suggestion about how to interrogate those captives at Guantanamo. Forget water boarding. Simply make them read these two works of economic pablum.
They'll tell you everything you want including forfeiting their first born.
To borrow a line from an old English professor who was, as he put it, sentenced after the age of 50 to an academic form of Dante's Inferno, reading freshmen papers, that "bore one to tears." In this case, tears is too generous, too kind.
Investors found market-moving information in the Fed's caution about raising rates while ignoring its long discussion about 'lift-off tools' it will use when it raises rates.
The ECB revealed that it was worried that the market would take it badly if the widely anticipated quantitative easing did not arrive, and that it upped it's proposed €50bn to €60bn, but for less time.
Central bank watchers revel in every dull sentence, and investors, plus the media, typically look in the minutes for an insight into policy mares' thinking. This is dangerous.
...the minutes are usually out of date. The last Fed meeting was before January's blowout jobs data, while the ECB's took place as market-based inflation expectations were rebounding (they have since dropped).
....they are little more than an extension of policy statements, not verbatim record of discussions. This is a form of propaganda, not a true insight. Serious disagreements may be visible in the minutes--but mostly would be obvious from public statements by individual policy makers long before the minutes were published.
Mackintosh further cites the unexpected or unknowns as when policy change their minds as happened in the Swiss National Bank debacle that few if any saw coming when banker suddenly undid the euro peg. It's valid point and further proves any claim to real transparency is just that, lip service.
Any credibility central bankers global wide enjoy depends on having a huge flock of lemmings. As Mackintosh writes: "....central bankers have little idea what they are likely to do than anyone else, as it depends on what happens in the economy--which they, like anyone else, are hopeless at forecasting.
Some clues to how they might react to new developments may be gleaned from the minutes, but most investors try to draw conclusions about how rates will move instead. Those who still believe the myth of central bank omniscience should look at their record."
Truth be told Mackintosh is only half correct in his assertion. Economists are renown for their distinct lack of writing style. Calling anything prose, dusty or otherwise, from that bleak quarter, is an act of magnanimity more befitting a saint.
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