Fed reaction function shift helped support recovery, research finds

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New research published by the Federal Reserve Bank of New York implies that markets viewed the Fed's move to calendar-based forward guidance in 2011 as a dovish shift in the central bank's reaction function, in stark contrast to other major central banks.

The staff report, by Katherine Femia of the NY Fed and two external authors, Steven Friedman and Brian Sack, sets out to discover whether a downward shift in market expectations of the future path of interest rates was the result of a perceptio

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