As Martin Barnes says in the latest from BCA, the Fed gets an “F” for clarity in its recent communications. Despite have declared that it will be more straightforward and less opaque, here is what we have seen in recent weeks:
An unnecessary and ill-advised shift to a neutral position after the October rate cut was quickly abandoned as it became apparent that the economy and markets needed more monetary relief. Then we had this weekâ€™s fiasco: hanging the markets out to dry on Tuesday with a timid move on the discount rate, followed by todayâ€™s announcement of plans to ease credit market strains. It is a mystery why yesterdayâ€™s policy statement did not warn that a new plan to boost market liquidity was on the way.