A Fed Decision Only Alan Greenspan Could Love
Forget all that transparency and communication mumbo jumbo. Asian central banks in the age of coronavirus must act decisively, too.
I did it my way.
Photographer: Andrew Harrer/Bloomberg
The coronavirus pandemic is giving birth to a new doctrine in central banking. What matters most isn't transparency or forecasts, but the ability to move quickly.
One of the big themes coming out of the global financial crisis was the idea that central banks should flood the zone with information — be it dot plots, forward guidance, statements, interviews or tweets. The Federal Reserve was a leader in developing that paradigm, varying degrees of which were adopted throughout the world. The challenge is that, in a crisis, monetary authorities must be able to move swiftly, without being hemmed in by their previous messaging. While actions of the past few days have been decisive, weeks passed with mixed messages.