Perceived shift in US Fed's monetary policy causes uncertainty

As the dust begins to settle around the latest perceived shift in policy on the part of the United States Federal Reserve, uncomfortable questions are being asked about the credibility of US monetary policy and the communication skills of the world's most closely watched central bankers.

First, what explains the sudden discrepancy between the relatively minor change in the Fed's economic forecasts - which anticipate no change in its outlook for inflation and only a minor downward revision to its estimate for the unemployment rate - and the fairly significant one in its interest rate projections?

Second, was there more to last week's off-the-cuff remark from Janet Yellen, the new Fed chairman, that there is likely to be a six-month interval between the end of the central bank's programme of quantitative easing and the beginning of interest rate rises than meets the eye?

Third, and most worryingly, given that this is the third time in just 10 months that the Fed has startled markets, what are the odds of the US central bank being able to keep treasury yields anchored at low levels prior to and after the first increases in rates?

What is clear is that markets are as confused as the Fed has once again allowed itself to be perceived.