Chastened over forecasting errors, Fed officials will be less likely to tip their hands on how they see the future.
by Jeff Cox
Ben Bernanke thinks his former colleagues at the Federal Reserve will be reluctant to raise interest rates anytime soon.
One of Wall Street’s favorite pastimes is trying to discern hidden meaning in language tweaks from Fed officials. But Bernanke, the central bank’s former chairman, thinks doing so under current conditions will only lead investors astray.
In part, that’s because most Fed officials have been wrong on their economic forecasts over the past several years. They anticipated that economic growth would be stronger, while both the unemployment rate and the natural level of interest rates would be higher.