Q. and A. With Charles Plosser of the Fed: Raise Rates Sooner Rather Than Later
Date-based guidance sometimes seems like a way for the Fed to achieve a consensus without actually achieving agreement.
That’s actually part of a challenge for the goal of consensus policy-making. To build a consensus you make vague statements that everybody can interpret any way they want to. Is that good communication? No, because everyone on the committee gets to interpret it their own way and then people get confused as to what it really means.
.. Basically prioritize precision over consensus.
Yeah.
.. We’ve entered a period where we’re kind of in uncharted territory. We don’t fully understand what happened or what made it happen. Economists are still debating the Great Depression. We’re going to be debating this for a long time, too.
.. But by 2010 we weren’t in a financial crisis anymore. My own view is that the rationale switched completely. It was no longer about providing liquidity; it was about providing stimulus at the zero lower bound.