The Federal Reserve is catching up with other central banks with its new transparency policy, Columbia University economics professor Frederic S. Mishkin said today in a Bloomberg Radio interview today.
Other central banks are “far more transparent” than the Fed, Mishkin, a former member of the Federal Reserve Board of Governors, said on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt.
The decision to reveal forecasts for the federal funds rate will go into effect at the Fed’s Jan. 25 policy meeting. It’s another phase of the Fed’s strategy of the “management of expectations,” Mishkin said. “Interest rates hit a floor -- zero,” he said, “They can’t go any lower.”
Central bank transparency can go too far, and there are limits to the effectiveness of openness, Mishkin said. “Providing more information on what happens inside meetings would be too much information,” he said.
(In the U.S., hear Bloomberg Radio on satellite radio: Sirius Channel 130 and XM Channel 129. In New York City, tune to WBBR 1130 on the AM dial.)
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