Fed Considers Forward Guidance

October 21 00:00 2011

New York,  Oct 20, 2011 (RainbowNewsLine.com) – Federal Reserve, the central bank of the United States,  signaled that it is working on removing a lot of uncertainty that is associated with its operations. The Fed is known to bring about sudden changes that leave the industry stumped and the markets in turmoil. Ben Bernanke agreed that the Fed is working on a plan that will provide the common people with common guidance.

At the moment there are numerous proposals being considered regarding ways to ensure that the Fed’s announcements do not merely remain dramatic or sudden. One of the ways suggested, is to ensure that the Fed ties its policy changes with key metrics such as interest rates, inflation rates, etc. Fed would then be expected to come out with a policy that will give other participants some idea about the direction and magnitude of the Fed’s next movement.

This decision has come on the back of rising investor concerns that perceive most of the market turmoil to be the result of the Fed’s sudden and out-of-the-blue policies. This has taken its toll on the US debt market of late as well. This is what has prompted the Fed to ensure that things do get better so that it can help Treasury to continue selling bonds.