Fed sets rate hike stage with a test, but it's only a test

WASHINGTON, April 29 (Reuters) - The Federal Reserve has set up a new system for holding press conferences by telephone, increasing the central bank's flexibility to explain an interest rate hike in months when one of its quarterly press sessions is not already scheduled.

The U.S. central bank held a conference call with reporters on Wednesday to test the system, a new technology that uses a PIN identifier to limit the number of phone lines to one per authorized media outlet.

Though the Fed already has the capacity to hold a telephone press conference, announcement of the new system comes amid speculation the central bank would not hike rates at a meeting of its policy-setting Federal Open Market Committee when it did not have an on-site press conference already scheduled at which to elaborate on its decision.

"Chair (Janet) Yellen noted that the Federal Reserve has the capacity to hold a news conference by telephone if needed ... We are testing those capabilities with this call," Fed spokeswoman Michelle Smith said, referring to Fed chief Yellen's remarks in a press conference following the March meeting.

"To be clear, this test is not signaling any planned future FOMC action. It is simply a test," Smith said.

The test of a relatively common technology, scheduled for just after Wednesday's market close, stresses the point that the Fed could announce its rate decision at any meeting and still have the means to explain itself in full.

Yellen has said that beginning in June the Fed will carry out a "meeting-by-meeting" debate on whether to hike rates. A press conference is already set for the June meeting. But there is not one scheduled for the July meeting, a fact that has led investors to downplay the possibility of a rate hike then.

For the rest of this year, press conferences also are scheduled for the September and December meetings, but not at the October meeting. (Reporting by Howard Schneider; Editing by Paul Simao)

Sorry we are not currently accepting comments on this article.