At the FOMC meeting held on April 29–30 in Washington, DC, participants noted that investors had well understood the changes to the Committee’s forward guidance at the March FOMC meeting.
The economic forecast discussed in the FOMC meeting held on April 29–30 in Washington, DC, saw the real gross domestic product (or GDP) growth rate at a slower pace than what the FOMC forecast in its March meeting.
While discussing the change in financial conditions prevailing in the U.S. economy since the FOMC last met in March, the FOMC agreed the situation hadn’t changed much
Indicators of foreign economic activity suggested continued expansion, though at a rate lower than in the previous quarter. The deceleration was concentrated in emerging market economies.
As part of the FOMC meeting held on April 29–30, the System Open Market Account (SOMA) gave its review of the financial markets and the Fed’s Balance Sheet since the committee last met on March 18–19.
The Federal Open Market Committee (or FOMC) and the Board of Governors of the Federal Reserve System met to discuss issues associated with the eventual normalization of monetary policy.
The members of the Federal Open Market Committee (or FOMC), the monetary policy–making arm of the Federal Reserve System in the U.S., meet eight times a year to assess the economy and discuss policy actions.
The strength of the primary investment-grade bond market is largely attributable to low interest rates in an improving economic scenario.
In this part, we will discuss his views on central bank transparency in setting the base rate and its future path.
In this part, we will discuss Dr. Plosser’s views on the use of systematic tools, for example, Taylor-like rules for setting policy rates and communicating these to markets.
The inflation and interest rate expectations of consumers and firms are important variables determining bond prices.
In this part, we will discuss Plosser’s take on the benefits of a rules-based approach versus a discretionary approach to monetary policy communication.
In this part, we will discuss aspects of Plosser’s speech relating to a rules-based or systematic approach to forward guidance.
The base rate has been in the range 0% to 0.25% since December 2008, as the Fed tries to spur economic growth following the Great Recession and financial crisis.
Charles Plosser explained why a systematic approach to determining the Fed’s monetary policy and communicating the same to financial markets would benefit the economy.
While gradualism does a good job of meeting market expectations, it’s not an optimal solution because it prevents timely execution of harsh monetary policy decisions.
Gradualism refers to a situation where changes in policy rates during easing and tightening of monetary cycle come in a series of small and relatively predictable changes.
Markets now accept that the taper will continue at the current rate of $10 billion a month. At this rate, the asset purchase program would end by September or October of this year.
The Federal Open Market Committee’s (or FOMC’s) actions don’t happen in isolation. FOMC makes its policy decisions based on the market scenario.
Policy analysts often talk about the Federal Open Market Committee’s (or FOMCs) “reaction function”—the way FOMC will behave in certain situations.