The problems with the Federal Reserve’s planned transparency

4th January 2012

The FOMC has been telling us this for some time now: '…participants turned to a further consideration of ways in which the Committee might enhance the clarity and transparency of its public communications.'

In itself this seems a laudable enough objective although informing people in plain clear language might be considered a way of doing this!

What does the FOMC intend to do now?

'The SEP (Summary of Economic Projections) will include information about participants’ projections of the appropriate level of the target federal funds rate in the fourth quarter of the current year and the next few calendar years, and over the longer run; the SEP also will report participants’ current projections of the likely timing of the first increase in the target rate given their projections of future economic conditions.'

The obvious first point is that the plan to communicate clearly has struggled over the first hurdle at best has it not? Oh dear. However the plan is to tell people what FOMC members think US short-term interest-rates will be for the next few years.

The fundamental problem with this

As Earth Wind and Fire put it:

"Take a ride in the sky

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