Wednesday, April 23, 2014

On Federal Reserve 'Calendar Guidance' versus 'Numerical Guidance'

From John Williams, President of the SF Fed:
In December of 2012, we introduced a new form of forward guidance. Instead of speaking in terms of dates on the calendar [calendar guidance] [as to when Fed interest rate policy might change], we began to tie the path of monetary policy to economic variables such as the unemployment rate [numerical guidance].