This allows for smoother adjustment of the economy to monetary policy decisions about interest rates. Transparency increases the near-term predictability of rate decisions made by the Federal Open Market Committee (FOMC), the Fed’s monetary policymaking body (Swanson 2004).As a result, Fed communication with the public (through speeches, publications, and statements accompanying its policy actions) may help improve the public’s economic forecasts and their understanding of the current state of the economy. There is some evidence that the Fed may produce better forecasts of output and inflation than private sector forecasters and the general public (Romer and Romer, 2000).In words of then-Governor and now Chairman Ben Bernanke (2004), “s public servants whose decisions affect the lives of every citizen, central bankers have a responsibility to provide the public as much explanation of those decisions as possible, so long as doing so does not compromise the decisionmaking process itself.” Being transparent can be viewed as the responsibility of central bankers because their decisions have such a strong impact on everyone in the economy.There are several reasons why transparency is important: Why do Fed officials communicate with the public so often? In short, the Fed, and in fact many central banks around the world, believe that frequent communication with the public makes the conduct of monetary policy more transparent to the public. Speeches given by officials from every Federal Reserve District can be found on the respective Federal Reserve Bank’s website, and are also linked to from the Minneapolis Fed’s website. Presidents of the twelve regional Federal Reserve Banks also frequently speak to the public. Members of the Federal Reserve Board of Governors generally give speeches several times a month. You are absolutely correct to have noticed that Fed officials speak to the public quite often, and have been doing so even more frequently in recent years. The answer is related to the topic of Fed transparency, which is crucial to the effectiveness of monetary policy.
0 kommentar(er)
