Economists mull how to improve Fed communications

Federal Reserve
Federal Reserve, Washington, DC

The Federal Reserve has become "too focused on time-based forward guidance", according to a group of private sector economists, who have considered how the Fed might improve its communications.

While time-based guidance might be useful in "unusual circumstances", the economists say, the Fed should normally focus on "relaying a data-based reaction function".

"If done effectively, a successful central bank communication strategy guides the market to do the heavy lifting for monetary policy by

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