More on the Fed’s haphazard move to forward guidance over QE

Today's commentary
Summary: Last week in the lead up to the FOMC meeting, I went through why I believed this meeting would mark a shift away from the QE regime. And while the Fed did not taper, indeed we are seeing a greater emphasis on forward guidance as a policy tool. Unfortunately, the Fed has been ham-fisted in making this transition. Some thoughts follow below.

The Fed did not taper as most of us expected. I realized the data were weak: inflation was below the Fed's informal red line, unemployment is still high, jobs data have been somewhat disappointing, and recently the PMI has fallen. I was most concerned with the rise in mortgage rates due to the widespread belief that tapering meant an accelerated tightening schedule. But, we also have the spectre of fiscal crisis coming for...


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