Federal Reserve Governor Waller Emphasizes Policy Response Rules and Transparency Issues

Federal Reserve Governor Waller stated that the Fed needs to establish clear and consistent policy response rules to enable market predictions. He pointed out that while the quantification of response functions may have flaws, it is very important from a qualitative perspective. He has significant disagreements with Fed Chair Waller regarding the perfection of response functions. On the issue of transparency, Waller criticized the old model of "never explaining," arguing that appropriately revealing future policy directions is more effective. He mentioned that there are strong internal disagreements within the Fed regarding communication issues, and there was also strong opposition to scenario analysis last year, with uncertainty remaining about the outcomes of the communication working group. Waller stated that the balance sheet working group will oppose any suggestions that lead to a scarcity of reserves and emphasized that the data working group needs to be vigilant about trust issues, using verifiable data. He believes that the inflation working group may be the most helpful to the Federal Open Market Committee (FOMC).

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