The Traderszone Network

Published in TZ Latest News 29 August, 2015 by The TZ Newswire Staff

Yellen ally pours cold water on rule-based monetary policy

For much of her tenure as head of the Federal Reserve, Janet Yellen has been pressured by Republican lawmakers who want the U.S. central bank to adopt a monetary policy rule, a straightforward formula connecting unemployment and inflation to a benchmark interest rate. On Saturday a Yellen ally and former adviser at the Fed delivered a provocative retort: the economic models underpinning those simple rules don’t work that well, and the best policy decisions come when central bankers look beyond those models to the unexpected forces shaping the economy.

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