A “queer policy” indeed

That´s because it can´t be simply called “policy”. Over time the Fed´s economic growth projection has been falling, and after it drops a few notches the Fed introduces something “new” (or “surprising”).

Queer Policy

What happens when you get to the “zero growth projection”? Last year Mark Carney ventured that forward guidance with thresholds was the “last resort” and “If yet further stimulus were required, the policy framework itself would likely have to be changed. For example, adopting a nominal GDP level target could in many respects be more powerful than employing thresholds under flexible inflation targeting.

My question: Why wait for the lower bound for the growth projection to hit zero?

5 thoughts on “A “queer policy” indeed

  1. Adding an arrow to the chart saying “Taper on, probably” in May/June 2013 makes the “policy” even more queer.

  2. Pingback: A “queer policy” indeed - The Corner The Corner

  3. For the math obsessed, the odds of 8 straight guidance reductions if the Fed were an unbiased predictor is: 0.0039! What’s the p-value on that?

    Can’t wait til these Nostradamuses start using the US money supply as an instrument to prick all the bubbles they spot! Good god.

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