Volker still remembers a thing or two:
“The fate of the Federal Reserve can’t depend on the accuracy of the forecasts it makes two years ahead,” he said. Offering up forecasts with greater frequency and details–the Fed now does this on a quarterly basis–simply demonstrates to the public “more frequently the forecasts aren’t that accurate.”
Fed guidance that has at points pointed to calendar-date expectations of rate increases, as well as official guidance that rates will stay very low for a long time to come, are ultimately unproductive, he said. “If you make it precise in terms of interest rates, then the market begins working against you,” and any disconnect between what the Fed promised and what it’s delivering can cause market trouble, he said.
Mr. Volcker also said that officials, other than the Fed leader, are talking too much these days and making it harder for the central bank leader to deliver a coherent message about the policy outlook.
It seems like “it’s kind of reaching a peak” for officials speaking out, Mr. Volcker said. He zeroed in on the rising tide of officials’ dissenting votes at Fed meetings in recent years.
“You can dissent if you feel strongly enough,” Mr. Volcker said. “But unless you are willing to do that with some restraint you probably shouldn’t be in the Federal Reserve.