Arbeitspapier
The effects of policy guidance on perceptions of the fed's reaction function
In the past few years, the Federal Open Market Committee (FOMC) has been using forward guidance about the federal funds rate in a more explicit way than ever before. This paper explores the market reaction to the forward guidance, with particular focus on the use of calendar dates and economic thresholds in the FOMC statement. The results show that market participants interpreted the FOMC's policy guidance as conveying important information about the Committee's policy reaction function. In particular, market participants came to expect the FOMC to wait for lower levels of unemployment for a given level of inflation before beginning to raise the target federal funds rate, thereby shifting to a more accommodative policy approach aimed at supporting the economic recovery.
- Language
-
Englisch
- Bibliographic citation
-
Series: Staff Report ; No. 652
- Classification
-
Wirtschaft
Monetary Policy
Central Banks and Their Policies
- Subject
-
monetary policy
forward guidance
- Event
-
Geistige Schöpfung
- (who)
-
Femia, Katherine
Friedman, Steven
Sack, Brian
- Event
-
Veröffentlichung
- (who)
-
Federal Reserve Bank of New York
- (where)
-
New York, NY
- (when)
-
2013
- Handle
- Last update
-
10.03.2025, 11:44 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Femia, Katherine
- Friedman, Steven
- Sack, Brian
- Federal Reserve Bank of New York
Time of origin
- 2013
Other Objects (12)
Searching for the FED's reaction function
Forward guidance under disagreement: Evidence from the fed's dot projections
Forward Guidance under Disagreement - Evidence from the Fed’s dot projections
Normalizing the fed funds rate: The fed's unjustified rationale
The Fed's real reaction function: monetary policy, inflation, unemployment, inequality and presidential politics
Modifying Taylor reaction functions in presence of the zero-lower-bound : Evidence for the ECB and the Fed
Modifying Taylor reaction functions in presence of the zero-lower-bound: Evidence for the ECB and the Fed
Modifying Taylor reaction functions in presence of the zero-lower-bound: Evidence for the ECB and the Fed
Modifying Taylor Reaction Functions in Presence of the Zero-Lower-Bound – Evidence for the ECB and the Fed
Modifying Taylor Reaction Functions in Presence of the Zero-Lower-Bound – Evidence for the ECB and the Fed
The Fed's Response to Economic News Explains the "Fed Information Effect"
The Fed's response to economic news explains the "Fed information effect"
Searching for the FED's reaction function
Forward guidance under disagreement: Evidence from the fed's dot projections
Forward Guidance under Disagreement - Evidence from the Fed’s dot projections
Normalizing the fed funds rate: The fed's unjustified rationale
The Fed's real reaction function: monetary policy, inflation, unemployment, inequality and presidential politics
Modifying Taylor reaction functions in presence of the zero-lower-bound : Evidence for the ECB and the Fed
Modifying Taylor reaction functions in presence of the zero-lower-bound: Evidence for the ECB and the Fed
Modifying Taylor reaction functions in presence of the zero-lower-bound: Evidence for the ECB and the Fed
Modifying Taylor Reaction Functions in Presence of the Zero-Lower-Bound – Evidence for the ECB and the Fed
Modifying Taylor Reaction Functions in Presence of the Zero-Lower-Bound – Evidence for the ECB and the Fed
The Fed's Response to Economic News Explains the "Fed Information Effect"
The Fed's response to economic news explains the "Fed information effect"
Searching for the FED's reaction function
Forward guidance under disagreement: Evidence from the fed's dot projections
Forward Guidance under Disagreement - Evidence from the Fed’s dot projections
Normalizing the fed funds rate: The fed's unjustified rationale
The Fed's real reaction function: monetary policy, inflation, unemployment, inequality and presidential politics
Modifying Taylor reaction functions in presence of the zero-lower-bound : Evidence for the ECB and the Fed
Modifying Taylor reaction functions in presence of the zero-lower-bound: Evidence for the ECB and the Fed
Modifying Taylor reaction functions in presence of the zero-lower-bound: Evidence for the ECB and the Fed
Modifying Taylor Reaction Functions in Presence of the Zero-Lower-Bound – Evidence for the ECB and the Fed
Modifying Taylor Reaction Functions in Presence of the Zero-Lower-Bound – Evidence for the ECB and the Fed
The Fed's Response to Economic News Explains the "Fed Information Effect"