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REPORT: The Fed's New Communication Strategy Is Taking Shape

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Panhead

Panhead
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REPORT: The Fed's New Communication Strategy Is Taking Shape

For months, the Federal Reserve has indicated it was working toward improving its communications strategy, which it could effectively use as a policy tool.

Now it seems that the new communications strategy is starting to take shape, reports the Wall Street Journal's Jon Hilsenrath and Luca Di Leo:

They are likely to spend much of their Dec. 13 meeting ironing out unresolved pieces of the new communications strategy and seem on pace to unveil it early next year. They have two major objectives: Be more explicit about the Fed's goals for inflation and employment, and articulate more clearly the interest-rate strategy to meet those goals.
...
Informally, the Fed already has made clear it wants the annual inflation rate to run at 2% or a bit lower over the long-run. A formal statement would codify the commitment. Such a declaration would likely run alongside a description of the Fed's goals for employment, which Congress requires it to mind along with inflation. Most Fed officials believe the unemployment rate could fall to 5% or 6% without triggering higher inflation.

To articulate its interest-rate strategy, the Fed would expand its quarterly release of the officials' projections for economic growth, inflation and unemployment. It would add details on the Fed's interest rate expectations underlying its economic projections, along with some description of the policy it expects to employ to reach its goals.

http://www.businessinsider.com/report-th....g-shape-2011-12


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