23 Mar 2015
‘I would like to see the forward guidance evolve over time’ – Fed’s Mester
FXStreet (Mumbai) - Speaking at a bankers’ conference in Paris today, Cleveland Fed President Loretta Mester urged that the forward guidance issued by the Federal Reserve should evolve to give more information on conditions the Fed assesses its policy setting.
Key Quotes:
"While explicit forward guidance was used as a policy tool during the recession and earlier in the recovery, in more normal times, away from the zero lower bound, I believe forward guidance should be viewed more as a communications device,"
"As such, I would like to see the forward guidance evolve over time to give more information about the conditions we systematically assess in calibrating the stance of policy to the economy's actual progress and anticipated progress toward our dual-mandate goals,"
"At this point, the FOMC doesn't anticipate selling the agency mortgage-backed securities on its balance sheet as part of the normalization process, although it might engage in limited sales in the longer run to reduce or eliminate residual holdings."
Key Quotes:
"While explicit forward guidance was used as a policy tool during the recession and earlier in the recovery, in more normal times, away from the zero lower bound, I believe forward guidance should be viewed more as a communications device,"
"As such, I would like to see the forward guidance evolve over time to give more information about the conditions we systematically assess in calibrating the stance of policy to the economy's actual progress and anticipated progress toward our dual-mandate goals,"
"At this point, the FOMC doesn't anticipate selling the agency mortgage-backed securities on its balance sheet as part of the normalization process, although it might engage in limited sales in the longer run to reduce or eliminate residual holdings."