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Central Bank Forward Guidance Does Not Work: Themes for April 13, 2014

Central Bank Forward Guidance Does Not Work: Themes for April 13, 2014

6 Years ago | April 13, 2014 00:00:00

Fed Changing Course?

Fed Minutes from Wednesday of last week illustrated the impossibility of central Bank calendar-related rate guidance. Lets face it, the central banks are no better than the rest of us at forecasting the economy. Because of this lack of clarity about the future, the only sensible approach is for policy to be data-dependant. Currently no one can reliably predict what the data will be a year from now. The people who run the central banks should not have to be told that!

So the basic message of the Fed Minutes seems to have been that Yellen's comment that rates could start to rise six months after the end of the asst purchases taper had been made off the cuff and was not policy. Hop

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