The Fed and the ECB should clearly communicate to the general public that monetary policy is only one of the instruments of economic management, writes Dr Michael Ivanovitch.
The Fed and the ECB should explain to the public that the monetary policy is only one of the instruments of economic management — fiscal and structural policies are also necessary to produce a steady and sustainable growth.
Jerome Powell, chairman of the U.S. Federal Reserve, pauses while speaking during a news conference following a Federal Open Market Committee meeting in Washington, D.C., on Wednesday, Sept. 18, 2019."I knew they would cave in." That was the cutting remark from an old Wall Street hand to one of my first forecasts that none of the economic indicators justified an imminent interest rate cut by theSince then, stunning memoir revelations of the U.S.
Congressional hearings are also of limited utility, since most of their focus is on what the Fed will do next. The Fed won't talk about it because that's for its policy forum to decide. It would also serve as a reminder that a sustainable full employment and price stability cannot be delivered by monetary policy alone, because that requires balanced public sector accounts, a pool of available and skilled labor, and competitive markets for goods and services.— the only true savior of the European economy — is a much more flagrant case of poor communication with the public in the 19 countries of the monetary union.
All that is very strange for a genuinely independent supranational institution whose sole mandate is to deliver price stability informally defined as a medium-term consumer price inflation between 0% and 2%. Failure to clearly explain that simple fact leads to distorted asset price expectations, based on guesses about central banks' actions as fixers of last resort .
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