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Journal Article
Understanding the New York Fed's Survey of Primary Dealers
The New York Fed?s Survey of Primary Dealers plays a key role in the Federal Reserve?s understanding of market expectations for monetary policy and the economy, providing timely and comprehensive dealer insight into a range of topics. In recent years, the survey has evolved to reflect the changing macroeconomic environment brought about by the financial crisis and by the Fed?s move into new policy tools aimed at adjusting the size and composition of its balance sheet and giving more explicit forward guidance on the path of short-term interest rates. This study offers an in-depth look at the ...
Report
The effects of policy guidance on perceptions of the Fed’s reaction function
In the past few years, the Federal Open Market Committee (FOMC) has been using forward guidance about the federal funds rate in a more explicit way than ever before. This paper explores the market reaction to the forward guidance, with particular focus on the use of calendar dates and economic thresholds in the FOMC statement. The results show that market participants interpreted the FOMC?s policy guidance as conveying important information about the Committee?s policy reaction function. In particular, market participants came to expect the FOMC to wait for lower levels of unemployment for a ...