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"In response to a financial crisis and a deep recession, the Fed's monetary policy communications have proved far more important and have evolved in different ways than I would have envisioned eight years ago," he has said.
"Recent panicked responses by financial markets to monetary policy communications and observations from a range of economists suggest the Federal Reserve's forward guidance clearly needs some improvement," Hensarling said.
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Therefore, this paper presents a set of fundamental principles regarding the joint design of monetary policy strategy and communications.
Mark J. Carney, the head of Canada's central bank and soon to be the governor of the Bank of England, also seems to be embracing the "whatever it takes" theory of communications: tying monetary policy to a single measure of overall economic health (like nominal income) rather than multiple metrics (inflation, inflation expectations, unemployment numbers) that may be even easier to understand.
Just as in the case of the ECB communications, the Fed's communications contain useful information about future monetary policy [44].
Communications are an important aspect of monetary policy.
The efficacy of central bank communications is inextricably linked to the characteristics of the monetary policy framework.
She has been central to moving the Fed toward more clarity and precision in its communications, an openness which she sees as the key to an effective monetary policy.
That is monetary policy.
(See also monetary policy).
What about monetary policy?
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com