Shifting the Guidance Burden
The Fed has spoken – taper and begin advancing the policy debate away from QE. Although the move was a surprise, the FOMC will likely reflect positively on the effectiveness of their guidance in maintaining general stability in sentiment. In hindsight, the strengthened interest guidance was far more important as an anchor. The median year-end Fed Funds Target Rates (FFTR) projections for 2015 and 2016 respectively fell, and the FOMC has also warned that the FFTR would remain
at current levels well past 6.5% in unemployment is breached. The added emphasis suggests leaving the zero bound will almost be fully discretionary.
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