DEFINITION of 'Fed Speak'

Fed speak is a phrase used to describe former Federal Reserve Board Chairman Alan Greenspan's tendency to make wordy statements with little substance. Many analysts felt that Greenspan's ambiguous "Fed speak" was an intentional strategy used to prevent the markets from overreacting to his remarks. The assumed intent of Fed speak was to obscure the true meaning of the Fed's intent in an effort to reduce anticipatory action by the market or the investment public. Since Greenspan's reign, other Fed chairs have communicated in a much more concise and direct manner. 

BREAKING DOWN 'Fed Speak'

Greenspan, who was chairman of the Fed from 1986 to 2006, was known for making vague statements that were not easily interpreted. For example, following a speech Greenspan gave in 1995, a headline in the New York Times read, "Doubts Voiced by Greenspan on a Rate Cut," while the Washington Post's headline that day said "Greenspan Hints Fed May Cut Interest Rates." Greenspan's successor, Ben Bernanke, is known for making more direct statements.

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