Fed's Fisher asks, is rate guidance just a fad?
LONDON, March 21
LONDON, March 21 (Reuters) - A top U.S. Federal Reserve official critical of the U.S. central bank's super-easy monetary policy on Friday questioned the very core of the Fed's current approach, which rests on giving markets a better sense of the future path of interest rates.
That approach, known as forward guidance, received a makeover on Wednesday, when Janet Yellen wrapped her first policy-setting meeting as Fed chair with a decision to jettison narrow economic guideposts in favor of a much broader set of measures to determine the timing and pace of future rate hikes.
Dallas Federal Reserve President Richard Fisher, in brief remarks released ahead of a planned speech in London, appeared to question even the basis of that approach, which Yellen has credited with keeping borrowing costs lower than otherwise and boosting an economy in great need of stimulus.
"Is 'Forward Guidance' a crotchet .... to which exaggerated importance is attributed?," Fisher said in the brief prepared remarks. "Have we at the (Fed) just taken up another fad? Or is this a real, lasting practice?"
Fisher did not answer that question in the prepared remarks.
Fisher is a member of the Fed's policy panel this year and is one of the U.S. central bank's most hawkish policymakers.
He wants the Fed to wind down its bond-buying stimulus as quickly as possible.