When it comes to monetary policies, mixed messaging is the new transparency, according to one Wall Street strategist.
On CNBC's "Trading Nation" last week, BK Asset Management's Boris Schlossberg said that in an attempt to decrease volatility and prop up the global economy, central banks around the world appear to be working in conjunction with one another.
"Something unusual happened after the G-20 meeting this year — all of the central banks went into very, very high accommodative mode," said Schlossberg. He pointed to the move to negative interest rates in Europe and Japan as well as China's decision to devalue it currency. "The markets have caught most investors by surprise because they haven't followed the proper script, but instead look to have been fully manipulated by central banks," he added.
The same goes for the Federal Reserve, said Schlossberg. "When the Fed came out it was much more dovish than anyone expected ... it was probably part of their strategy to basically make sure the markets remained relatively calm." The U.S. central bank surprised investors earlier this month by cutting the projected number of interest rate hikes for this year, which sent volatility to year-to-date lows.
"If they had announced that they were going to raise rates relatively quickly, I think that would have sent financial markets into turmoil and the sharply higher. It would have in turn, created much more than they wanted at this point," said the CNBC contributor.
For Schlossberg, this is all part of a grander plan to convince investors to discount the possibility of a rate hike, so it can raise interest rates in a stronger market.
"My argument is that ultimately the Fed knows they have to raise rates because the fundamentals are pointing that way, but they want to do it at their own time in their own terms — when they think the markets are strong enough to absorb the news," he added.
