Fed Communications and Inflation Expectations | Metals Mine

  • Fed Communications and Inflation Expectations

    From frbsf.org

    Central banks use changes in short-term interest rates as their primary monetary policy tool. However, effective transmission of monetary policy to the economy also depends on the ability of central banks to affect financial conditions more broadly, including long-term interest rates and prices in various financial markets. They accomplish this in large part by communicating the likely future path of policy rates and their assessment of risks around this outlook. If this communication is effective, financial markets respond and quickly incorporate the new information. Two of the most important ways the Federal ... (full story)

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