He isn’t overly happy about the Fed communicating its forward guidance at present:
- Promising low rates until after conditions improve could unanchor inflation expectations
- Threshold-based rate guidance is a step in the right direction, doesn’t go far enough
- Fed should identify key economic variables and explain policy in terms of those variables
- Since Fed credibility is imperfect and fragile, forward guidance my have counterproductive effects
- Fed vagueness on policy path after economy hits thresholds runs counter to theory
Added: Is ‘unanchor’ even a word?