I’m not someone who engages in gratuitous Fed criticism for the sake of it, and I don’t generally care for people who do.

Scapegoating technocrats is in some ways cowardly, but it’s also unimaginative, which is worse in my book. In another life, I very briefly made a “career” of overwrought Fed opprobrium. It wasn’t a particularly enjoyable “profession.”

That said, I still lodge complaints on a fairly regular basis, some of them serious, some of them more pedantic. Over-communication falls into the latter category, but over-communicating, to the extent it results in frequent mea culpas and about-faces, can be a serious problem.

The Fed still has it in their head(s) that more communication is always better, the idea being that communication is synonymous with transparency. The problem’s straightforward: Just because you’re talking doesn’t mean you’re communicating. Sometimes talk is just noise. Noise can be conducive to confusion. And if you look up antonyms for transparency, they’re all cousins of confusion.

Fed officials talk way (way) too much between policy gatherings, and I think a lot of people would agree that quarterly projections for various macro outcomes and the trajectory of policy rates are another example of over-communication. The SEP and the dot plot are superfluous at best, and a source of ridicule and confusion at worst.

The Fed would almost surely be better served to set policy, release a statement and be done with it. Because let’s face it: Unless there’s a serious crisis afoot, regular people don’t need to hear from the Fed. It’s not really supposed to be a public-facing job. Granted, they don’t want to inadvertently perpetuate conspiracy theories by endeavoring to never be seen, but at the same time, they’re not celebrities. This habit they’re in now of touring local breweries and showing up random places with an entourage in tow has an air of farce to it.

More importantly, the public would be better served by the Fed if the Committee returned to a more understated, low key approach. I’m not sure if this has occurred to Jerome Powell, but exactly no one on Main Street listens to his press conferences anyway, let alone to anything his colleagues say during the many dozens of speaking engagements they schedule between meetings. But markets — which is to say gamblers — do, and that’s where the problems come in.

What happens in markets affects real people, in some cases more than Fed decisions themselves, and the Fed’s incessant chattering is, in my opinion, conducive to volatility and misplaced bets. Do note: That marks a stark reversal from the post-GFC, low vol years when forward guidance served to anchor and suppress volatility by ensuring markets and policy were in step or at least on the same page. In that context, you might plausibly argue that a market flying “blind” with no Fedspeak would be more prone to oscillations, but it’s important to remember that the “dialogue” between policymakers and markets in the post-GFC, pre-pandemic era played out against a relatively predictable, disinflationary, slow-growth macro backdrop. That’s not today’s macro regime.

With that in mind, the incoming Fed rhetoric has shifted in recent days to a more cautious tone on the rate cuts the Committee “promised” via the dot plot last month. Just this week (and it’s only Tuesday), Lorie Logan, Neel Kashkari and Jeff Schmid all suggested the pace of cuts may be slower — and certainly the size of cuts smaller — given US economic resiliency and rampant uncertainty. Mary Daly disagrees and maybe Powell does too, but one look at 10s tells you everything you need to know.

The figure above shows the rolling one-month change in benchmark US yields: Up 50bps since the Fed meeting. Or damn near.

Without delving into any over-complicated analysis, I’d gently suggest that not a lot actually changed in terms of the US macro fundamentals over the 18 months captured by that chart. The economy added jobs, consumers spent money and growth was fairly robust. There was some volatility, sure, but that’s not what the swings illustrated above reflect. Those swings reflect wagers on the the Fed’s psychological disposition, and the Fed plays into that by putting officials “out there” all day, every day. Then, in the crucial days before policy decisions, they turn out the lights completely and board up the doors in a self-imposed, pre-meeting “blackout.”

I should note that core inflation obviously moved lower over the past two years, which should generally be expected to bias policy in a dovish direction (certainly relative to the 2022 experience), but I wonder if all the fireworks were warranted by the “fundamentals.”

The figure shows the Treasury “VIX.” Rates vol remains very elevated.

As alluded to above, there’s more than a little irony here: Forward guidance (colloquially: A lot of talking) is supposed to keep volatility anchored. Instead, all the talking seems to be contributing to volatility.

If we are, as many believe, in a new era defined by rolling shocks and elevated macro vol, Fed officials would do well to talk less rather than risk demonstrating how much they don’t know. “Better to keep silent and be thought a fool than to speak and remove all doubt,” as the saying goes.

At the end of the day, policy settings and market rates should reflect the macro environment, which is to say the data and incoming information. If that means rates are volatile and policy’s subject to change at a moment’s notice, so be it. That’s better than the current conjuncture. Because right now — and I’m quoting myself from an April article — this is just a “parlor game where gamblers wager not on the evolution of the data, but rather on how a panel of technocrats is likely to react to that data.” That’s not what you want. And it doesn’t serve the public interest.