The FOMC's Balance-of-Risk Statement and Market Expectations of Policy Actions

Resource Information

The work The FOMC's Balance-of-Risk Statement and Market Expectations of Policy Actions represents a distinct intellectual or artistic creation found in Bowdoin College Library. This resource is a combination of several types including: Work, Language Material, Books.

Label

The FOMC's Balance-of-Risk Statement and Market Expectations of Policy Actions

Creator

• Inter-university Consortium for Political and Social Research [distributor]
• Rasche, Robert H

Contributor

• Thornton, Daniel L.

Author

• Thornton, Daniel L.
• Rasche, Robert H

Contributor

• Inter-university Consortium for Political and Social Research [distributor]

Subject

• securities
• interest rates
• monetary policy
• risk assessment

Summary

In January 2000, the Federal Open Market Committee (FOMC) instituted the practice of issuing a "balance of risks" statement along with their policy decision immediately following each FOMC meeting. The authors evaluate the use of the balance-of-risks statement and the market's interpretation of it. They find that the balance-of-risks statement is one of the factors that market participants use to determine the likelihood that the FOMC will adjust its target for the federal funds rate at their next meeting. Moreover, they find that, on some occasions, the FOMC behaved in such a way as to encourage the use of the balance-of-risks statement for this purpose. The clarifying statements that sometimes accompany these balance-of-risks statements, as well as general remarks made by the Chairman and other FOMC members, often provide additional useful information