Mester: Fed should consider developing consensus forecasts

Cleveland Fed President Loretta Mester delivered a speech on “Forward Guidance and Communications in US Monetary Policy” in London.

• Nothing on the current outlook
• Policymakers must explain rational for decisions
• Fed forecasts could better communicate probabilities

There was some talk about developing consensus forecasts in the FOMC Minutes. It’s clear that the ‘dot chart’ is causing some confusion and volatility in markets.

I think the Fed would be much better leaving markets to figure out the path of the economy and it’s inevitable that Fed forecasts will be wrong and used as fodder against it.