New Federal Reserve ‘Qualitative’ Approach Could Push Further Into Experimental Realm
Never underestimate American ingenuity, especially when it comes to the Federal Reserve’s ability to invent monetary policy on the fly.
The U.S. central bank’s top officials, led by Chair Jerome Powell, are expected this week to announce new “qualitative outcome-based” guidance to specify the conditions under which they might taper their stimulus-focused bond purchases, now proceeding at $120 billion a month. Such qualitative guidance would hinge on subjective criteria, such as a promise to keep buying bonds at the current pace until the pandemic is under control – which might be open to interpretation.