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Thursday, July 21, 2016

Yellen Needs to Make More Speeches

Narayana Kocherlakota:

Yellen Needs to Make More Speeches: What does the U.S. Federal Reserve think about the repercussions of Britain's vote to leave the European Union? Amazingly, we still don’t really know...
Fed officials give a lot of speeches, and many have addressed Brexit in recent weeks. But, as they always say, they don’t speak on behalf of the Federal Open Market Committee...
Only one official, Fed Chair Janet Yellen, has the authority to speak on the committee's behalf, and she does so rarely. ... In all, according to the Fed's website, she has discussed policy at six formal public appearances this year. Her next won’t come until the Kansas City Fed's Jackson Hole conference in late August and the committee meeting of Sept. 20 to 21. ...
The Fed hasn’t always been so taciturn. In 2004, at the beginning of the central bank's last tightening cycle, Chairman Alan Greenspan spoke or testified on 29 separate occasions... Granted, his language was famously hard to parse. But by speaking nearly three times a month, he left no confusion among the public or Fed watchers about who to follow if they wanted to know the future course of monetary policy.
Today, people are a lot more concerned about the state of the global economy than they were in 2004... So if anything, the Fed should be communicating more. That means having a press conference after every open-market committee meeting, and having Yellen make a lot more public speeches. ...

    Posted by on Thursday, July 21, 2016 at 10:45 AM in Economics, Monetary Policy | Permalink  Comments (57)


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