Tuesday, February 27, 2024
Homefederal reserveFed's Fisher asks, is rate guidance just a fad?

Fed’s Fisher asks, is rate guidance just a fad?

A top U.S. Federal Reserve official critical of the U.S. central bank's super-easy monetary policy on Friday questioned the very core of the Fed's current approach, which rests on giving markets a better sense of the future path of interest rates.

That approach, known as forward guidance, received a makeover on Wednesday, when Janet Yellen wrapped her first policy-setting meeting as Fed chair with a decision to jettison narrow economic guideposts in favor of a much broader set of measures to determine the timing and pace of future rate hikes.

(Read more: Fed's Kocherlakota blasts new rate guidance)

Dallas Federal Reserve President Richard Fisher, in brief remarks released ahead of a planned speech in London, appeared to question even the basis of that approach, which Yellen has credited with keeping borrowing costs lower than otherwise and boosting an economy in great need of stimulus.

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