TITLE

Have Increases in Federal Reserve Transparency Improved Private Sector Interest Rate Forecasts?

AUTHOR(S)
SWANSON, ERIC T.
PUB. DATE
April 2006
SOURCE
Journal of Money, Credit & Banking (Ohio State University Press);Apr2006, Vol. 38 Issue 3, p791
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
Yes. This paper shows that, since the late 1980s, U.S. financial markets and private sector forecasters have become (1) better able to forecast the federal funds rate at horizons out to several months, (2) less surprised by Federal Reserve announcements, (3) more certain of their interest rate forecasts ex ante, as measured by interest rate options, and (4) less diverse in the cross-sectional variety of their interest rate forecasts. We also present evidence that strongly suggests increases in Federal Reserve transparency played a role: for example, private sector forecasts of GDP and inflationhave not experienced similar improvements over the same period, indicating that the improvement in interest rate forecasts has been special.
ACCESSION #
20519701

Tags: ECONOMIC forecasting;  UNITED States. Federal Reserve Board;  ECONOMIC indicators;  INTEREST rates;  MONETARY policy;  GROSS domestic product

 

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