Economics
The Trouble With Fed Transparency
Linking policy to specific jobless numbers confuses investors
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Federal Reserve Chairman Ben Bernanke wants to bring transparency to central banking, so investors will get clear signals of what the Fed plans to do and when it plans to do it.
Tying the central bank’s policy decisions to unemployment rates is one example of the doctrine at work. Fed policymakers pledged in December that they wouldn’t consider a rate hike as long as unemployment exceeded 6.5 percent. Bernanke said in June he expected the Fed would end its bond buying—which channels money to banks so they can lend—when joblessness reached 7 percent.