26 Mar 2014
Fed's Plosser favours rules-based policy
FXStreet (Bali) - Philadelphia Fed President Charles Plosser, in prepared remarks for delivery to a bond-traders dinner, reiterated that rules-based policy is favoured as opposed to increased discretion.
In headlines crossing the wires now, Plosser added: "The Federal Reserve should clearly articulate what would prompt it to tighten monetary policy after more than five years of near-zero interest rates."
"A systematic set of rules would set out a “reaction function” that would help the public better understand when the U.S. central bank would raise rates."
"His preference for dealing with so-called forward guidance on rates is for the Fed’s policy-setting Federal Open Market Committee to “articulate a reaction function as best it can.”
“But even if the FOMC were not prepared to choose a particular rule, it could articulate more clearly a qualitative reaction function that would serve as a baseline for future changes in policy as we exit the zero lower bound”
“It is my belief that doing so would be a more understandable form of forward guidance, less subject to misinterpretation as policy transitions from unusual times to more normal times”
It is likely that further headlines from Plosser cross the wires later, as he will be speaking to reporters afterwards.
In headlines crossing the wires now, Plosser added: "The Federal Reserve should clearly articulate what would prompt it to tighten monetary policy after more than five years of near-zero interest rates."
"A systematic set of rules would set out a “reaction function” that would help the public better understand when the U.S. central bank would raise rates."
"His preference for dealing with so-called forward guidance on rates is for the Fed’s policy-setting Federal Open Market Committee to “articulate a reaction function as best it can.”
“But even if the FOMC were not prepared to choose a particular rule, it could articulate more clearly a qualitative reaction function that would serve as a baseline for future changes in policy as we exit the zero lower bound”
“It is my belief that doing so would be a more understandable form of forward guidance, less subject to misinterpretation as policy transitions from unusual times to more normal times”
It is likely that further headlines from Plosser cross the wires later, as he will be speaking to reporters afterwards.