Bernanke’s Forward Guidance Is Transparent as Mud
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June 20 (Bloomberg) -- Federal Reserve Chairman Ben S.Bernanke seemed a little nervous at his June 19 news conference.His recent comments about the future course of monetary policyhad rattled investors and driven bond yields up, tighteningfinancial conditions in a way the Fed didn’t want. Formallyunperturbed, Bernanke said he was leaving policy unchanged --but in trying, yet again, to elucidate the Fed’s thinking, hetacitly admitted that something had gone wrong.
Fortunately, the policy itself, I think, is basically good-- but that’s despite, not because of, the ever-evolvingformulas used to explain it.