Transparency Means Different Things to Different People
Recently Jerome Powell, Chairman of the Federal Reserve, said that “transitory has different meanings to different people.” I believe that their pledge to have “full transparency” has the same ambiguity with a lack of full clarity.
It is true that many of the monetary policy components the Fed is deciding upon are discussed. But it is what is not said leaves much to be desired in terms of completely conveying upcoming monetary policy changes. There are also subtleties in words used to describe forthcoming adjustments, such as tapering their asset balance sheet, and the beginning of interest rate normalization. It is widely known that the Federal Reserve’s actions are data-driven and as that data changes so does the outlook of the Federal Reserve. However, there was no mention either in the statement or the press conference about winding down their assets accumulated on their balance sheet.
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