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    To Forecast or Not?

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    Could you please help me with these questions?

    The Federal Reserve is the arbiter of interest rate policy in the U.S., and as such, members of the Fed board can send shivers down the spines of investors with a single misinterpreted word or offhand remark. Recently, the Central Bank started issuing more forward-looking guidance on interest rate policy, but board members disagree on whether that prognostication is good or bad for the economy.

    In this article "How transparent should the Federal Reserve be?" {http://money.cnn.com/2011/09/26/news/economy/federal_reserve_monetary_policy/index.htm?iid=SF_BN_River }
    Which board member's opinion you agree with (or agree more with) and why with at least three well-supported reasons (and references sources).

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    Solution Preview

    It is difficult to say which board member's opinion you agree with (or agree more with).

    That being said, there are two arguments here but not a lot of difference. Both President of the St. Louis Fed James Bullard and Fed Governor Sarah Bloom Raskin agree with the course of the Fed in recent years: low interest rates and easy money policy in the face of economic recession. Their disagreement appears to be on the explicit setting of time limits for interest rates. Bullard doesn't wish to promise low interest rates for the future, while Raskin wishes to send the signal to the markets that interest rate policy will continue as it is for the foreseeable future.

    The arguments in favor of Raskin's viewpoint is mainly that it will ...

    Solution Summary

    The solution discusses the different board member's opinions and which one is agreed with more and why.