As the Fed meets in Jackson Hole, Wyoming, to discuss how to make monetary policy, many on Wall Street are convinced there isn’t any blueprint to do so.
The CNBC Fed Survey found that 60 percent of respondents say the central bank lacks a framework for deciding on interest rates, with just 24 percent saying they do and 16 percent unsure. Of the 39 respondents, who include economists, fund managers and strategists, 47 percent say current policy is made more on the latest economic report, and 38 percent say it’s based on the Fed’s own professed measures, which change in the medium-term outlook.
“The Fed has failed to come to a consensus on communications,” Diane Swonk, founder of DS Economics, wrote in response to the survey. “The blow to credibility is leaving markets pricing a form of infinite easing.” Swonk worries about the Fed destabilizing the market by raising rates and yet creating bubbles in financial markets if it doesn’t.
via CNBC 
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