Fed’s Lacker warns that forward guidance on rates may depress growth
The Federal Reserve's Jeffrey Lacker has said that forward guidance may threaten economic growth – as central banks assure markets that rates will stay low, this may itself dampen expectations of future growth.
In practice, he says that separating forward guidance on rates from asset purchases has proven difficult.
Credibility requires consistency, over time, between a centarl bank's statements and its subsequent actions.
Lacker said that greater scrutiny over the Federal Reserve's governance arrangements may lead the public to question their legitimacy.