Take “Considerable” Care of Fed Wording: Plosser doesn’t like it, and we can assume from recent comments that Fisher doesn’t either, even if he didn’t dissent at last week’s meeting. However, most FOMC members still see a “considerable” period between the end of QE and rate hikes.
But as we know from Yellen’s slip of the tongue earlier in the year, considerable could mean only 6 months. That was the case in 2004, when the promise to keep rates low for a considerable period was dropped in the January meeting, before rates started to rise in June.
But US$ bulls shouldn’t wait. Looking back to 2004, the greenback strengthened on the dropping of “considerable”, and actually fell on the day rates started to rise. Taking considerable care of FX holdings should mean buying US$’s now.
CIBC