Fed Thoughts: A Deer in the Headlights

The meeting schedule of the Federal Open Market Committee (FOMC) is set more than a year in advance. Sometimes, this means unpredictable events intrude, crowding out careful consideration of incoming information and the economic outlook. As a prominent example this year, the date of the UK referendum on continuing membership in the European Union was only set this February, well after the FOMC calendar was chiseled in stone. The possibility of a market-moving event, at the time well underpriced relative to the outcome, stayed policymakers’ collective hand. Despite the foreshadowing of tightening by some of the group, the policy result in the event was another observation that this cohort of Fed officials have much in kind with twitching-nosed deer, fearful of bad things in the bushes.

Sometimes, Fed scheduling is harder to fathom. It has been known since 1789 that a Presidential election will be held in all even-numbered years divisible by four. This includes 2016. Still, well in advance, an FOMC meeting was scheduled for November 1st-2nd, the week before that election. As a consequence, the rustling in the political forest and downwind scents will send FOMC officials scurrying into the hills.

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