Sunday, May 1, 2022

The Fed Calls It "Forward Guidance". In the 80's, We Called It "Head Games"

 “Credible forward guidance means market interest rates have increased substantially in advance of tangible Fed action. This provides another definition of ‘behind the curve,’ and the Fed is not as far behind based on this definition.” (per Bullard)

The Fed uses forward guidance, which provides clues to the market about where policy is going.

“You don’t do anything, but markets think you will, so you get response before action,” Bullard says. 

The presidents of the Federal Reserve Bank and members of the FOMC will continue to provide clues and warnings to their upcoming decisions, says Ernie Goss, Creighton University economist.



Playing mind games (also power games or head games) is the largely conscious struggle for psychological one-upmanship, often employing passive–aggressive behavior to specifically demoralize or dis-empower the thinking subject, making the aggressor look superior.  

I hate the new and improved Fed.

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