|
 A third, meanwhile, warned that the Fed should be sure not to
withdraw monetary policy accommodation before the economy is ready.
The call for more clarity on rate-hike plans comes just weeks after
the Fed jettisoned a very specific promise to keep rates low until
unemployment falls below 6.5 percent, and instead said rates would
stay low for a considerable time beyond the end of its massive
bond-buying program, which should wind down later this year.
After the policy-setting meeting, Fed Chair Janet Yellen briefly
roiled markets when she suggested that "considerable time" might
mean around "six months."
"We would be better off having more of a collective vision as a
committee to what the change in conditions would have to be that
would lead us from ending the asset-purchase program to raising
rates," Narayana Kocherlakota, president of the Federal Reserve Bank
of Minneapolis, told reporters after speaking to the Greater
Rochester Chamber of Commerce.
"Unless we communicate as a group about what those conditions are,
then we face this instability that two words in a press conference,
or two words in a speech or an answer to a senator can end up moving
financial markets participants' vision of what we are trying to do
with policy."
Kocherlakota's lone dissent against the Fed's policy decision last
month marks him as the central bank's most dovish member. On
Tuesday, he said the Fed should consider lowering the target for its
main policy rate, already between zero and a quarter of a percentage
point, even further, and could cut the interest rate its pays banks
on funds they keep at the Fed.
Those ideas do not appear to have broad support at the Fed.
A PLEA FOR MORE PRECISION
Still, on Tuesday, one of the Fed's most hawkish policymakers joined
Kocherlakota in calling for better rate guidance.
[to top of second column] |
After the Fed said last month it would look at a wide range of
factors to judge when the economy is strong enough for rates to
rise, some investors and economists have kept busy developing
"economic dashboards" and complex data "webs" to keep tabs on how
close to healthy the economy may actually be.
"It was an important step," the hawkish chief of the Philadelphia
Fed, Charles Plosser, said of the new Fed rate guidance. "And I'd
like to see us ... refine that language, make it clearer as to what
exactly we mean by that. ... That will be a tricky task, but I think
we can make some progress on that ... (and) be more precise about
it."
The timing of the first rate increase, which will probably come next
year, will be "all about the data," Plosser said. The central bank
is "not even close to withdrawing support prematurely."
Speaking at a separate event in Washington, Charles Evans, president
of the Federal Reserve Bank of Chicago, voiced that very concern.
"One of the big risks is that we withdraw our accommodative policies
prematurely," he said during a panel discussion at the International
Monetary Fund.
(Reporting by Ann Saphir in Rochester, Minnesota, and Jonathan
Spicer in Philadelphia; editing by Jan Paschal)
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