Posen: Fed Trying to Convey Committee Consensus

The transcript discusses the Federal Reserve's political dynamics, focusing on Chair Yellen, Vice Chair Fischer, and President Dudley's roles. It explores the Fed's strategy in managing market expectations, particularly regarding rate hikes, and the use of game theory to influence market learning. The conversation also touches on the potential impact of dollar strengthening and the effectiveness of negative interest rates in various countries, highlighting the perspectives of central bankers like Stanley Fischer and Governor Karoda.

What was the main message conveyed by the presence of Dudley and Vice Chairman Fischer with Chair Yellen at Jackson Hole?

• To indicate a shift in policy direction

• To highlight individual opinions of committee members

• To demonstrate broad consensus and support for Chair Yellen

• To show a lack of consensus within the committee

Why is it important for the Fed not to surprise the markets with rate hikes?

• To reduce the influence of foreign markets

• To maintain market stability and credibility

• To increase market volatility

• To encourage speculative trading

How can discussing market expectations affect the dollar without an actual rate hike?

• It leads to a decrease in inflation

• It has no effect on the dollar

• It can strengthen the dollar, tightening conditions

• It can weaken the dollar

What is Vice Chair Fischer's stance on negative interest rates?

• He is undecided about their impact

• He thinks they should be abolished

• He supports them as effective in certain economies

• He believes they are ineffective

Which countries were mentioned as examples where negative rates are functioning as expected?

• Australia and New Zealand

• Denmark, Sweden, and Switzerland

• United States and Canada

• Germany and France