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More recently, Fed credibility allows it to use its "communications tools", providing forward guidance to manipulate expectations, presumably for the betterment of overall economic activity.
"That expected inflation has thus far adjusted only modestly lower during this cycle may be the result not of Fed credibility to generate inflation in the future, but instead may be the result of the fact that the Fed in the past has delivered 2 percent inflation," he wrote in a paper presented here.
Underlying this reluctance is a concern that Fed credibility is more tenuous than many believe that a move by the Fed to address the crisis more agressively may be interpreted as a sign of politicisation of the Fed or of the central bank's intention to monetise the debt.
Fifth, the end of Chairman Alan Greenspan Alan Greenspan 's term in early 2006 will reduce Fed credibility and thus lift interest rate risk across the yield curve.
Turning to the fundamentals: Corporate borrowing needs have remained subdued to date as the corporate financing gap remains negative; inflation expectations remain well anchored and Fed credibility remains high; and last but not least, the recent downgrade in growth expectations for 2005 explains a significant portion of the most recent dip in the ten-year yield.
The inflation problems of the 1970s, the loss of Fed credibility that came with it, and the need to impose the Volcker recession in the early 1980s to bring inflation down to tolerable levels made an indelible impression on policymakers who lived through that time period.
Similar(51)
Beyond that, the continued cost of the war plagues us and feeds the credibility gap.
The "white house scandal" remains unresolved, feeding a deep credibility crisis neither the president nor the government appear willing to seriously address.
But that's a far cry from making public declarations of political opinions, a practice he believes would "erode our credibility and feed the false notion that there are no real facts, no impartial reporting or analysis — just spin and polemic".
Bloomberg this month announced that it was integrating Twitter feeds into its terminals.Twitter's credibility (a novel idea to non-tweeters) has taken a hit.
"We want to be absolutely sure that we restore total credibility, and we will feed you with all the details of our business to satisfy everyone of you," Cees van der Hoeven, Ahold's chief executive, told analysts today.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com