Comments from PIMCO's Richard Clarida, a managing director in the New York office and PIMCO's global strategic advisor on the FOMC.
He says there will be no change in policy at this meeting
At the press conference Yellen will offer her perspective on the timing and pace of normalization
- The standard for the labor market is "continued improvement," and given the strong recent employment data, Yellen will likely confirm Wednesday that this condition is likely to be met "at some point this year
- On inflation, note the Yellen standard for a hike is not that actual inflation moves back to 2% but only that the Fed be "reasonably confident" that inflation will move back to target in the medium term
So the big news, if any, on Wednesday will be if and how Yellen refines her language to indicate when "later this year" is likely to happen - September or December?
- If she gives no guidance other than uttering the phrase "data dependent," markets may interpret this as a signal that September is unlikely
- If, instead, Yellen seems to indicate September ... she has the opposite problem, which is that she will be seen as giving calendar date guidance when she wants the Fed to get away from that
PIMCO sees higher odds of a September hike than the markets do
