Friday, October 16, 2015

Policy Confusion Within The Fed

"Prescriptive rules will wind up being behind the curve," said Dudley, who did not comment on the outlook for the economy or monetary policy.

The Fed's models, tools used for policy timing for decades, are highly mathematical. Comments suggesting that the Fed should not be a slave to mathematical formulas suggests a growing divide between those that trust and do not trust models within the Fed.

Headline: Fed's Dudley opposed to a rule-based approach to rate policy

Oct 15 The Federal Reserve must be clear about its plans for interest rate policy but should not be slave to mathematical formulas, New York Federal Reserve President William Dudley said on Thursday.

For the Fed to effectively guide the economy, "households and businesses need to be able to anticipate how the Federal Reserve is likely to respond to evolving conditions," Dudley said in prepared remarks for a panel in Washington.



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