Friday, September 19, 2014

QE and Fed's verbosity!

For long Central Bankers had a reputation for being laconic and inscrutable. Then came the global financial crisis and unconventional monetary policies, which made Chairman Bernanke deploy the Fed's communication strategy as an instrument of monetary policy.

Interestingly, as this striking correlation between the expansion of Fed's balance sheet and the length of FOMC statements show, this strategy effectively meant a dramatic increase in the volume of Fed communications.
It is a matter of great interest whether this verbosity, as it generally does, ended up confusing than clarifying.

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