William Wallace Watch

From MarketWatch: [St. Louis Federal Reserve President James Bullard] said he would like the policy-setting Federal Open Market Committee “to adopt a state-contingent policy rule that would allow for the adjustment of asset purchases as new information on the economy becomes available.”

If I don’t have my Fed decoder ring on backwards, I would take “state-contingent policy” to be a form of the history contingent policy I predicted the Fed would start talking about. BTW, Bullard wants the market to stop looking at interest rate policy as the only indicator of monetary policy. He’s also sitting on the FOMC this year.

2 Responses to “William Wallace Watch”

  • Well, I’m not sure what to read into this (I don’t have a decoder ring, but you know me, “policy mystique” is cancer to a free society).

    Technically, the Taylor rule qualifies, if the state is taken to be the output gap and the deviation of inflation from target, both as read off real-time data.

    I would also focus on the “asset purchases” part of the quote, given that this is a quote about the success of quantitative easing. Maybe some money supply measure or an indicator of the composition of the government’s liabilities will be back in fashion?

  • pushmedia1 says:

    I think he was talking about a inflation target rule. BTW, my point isn’t to get all fanboy about the Fed. My point is that credible and effective policy change happens this way and not with grand speeches.