The Federal Reserve should expect more “bumps in the road” as financial markets react to increasingly less precise communications from the U.S. central bank, a top Fed policymaker said on Tuesday.
In a speech, Fed Governor Jeremy Stein recalled last year’s abrupt run-up in market-wide borrowing costs and warned that even the most deliberate communications from the central bank cannot prevent such reactions as the time to tighten monetary policy approaches.
“As policy eventually normalizes, guidance will necessarily take a different form; it will be both more qualitative as well as less deterministic,” said Stein, who leaves the Fed later this month.
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