It’s right for economic data to influence the Federal Reserve’s policy approach. Yet, there is an important distinction between being informed by the numbers and being held hostage by them — particularly for an institution whose tools operate on the economy with a lag. Indeed, the Fed’s often-repeated mantra of “ data dependency” risks causing another mistake.

Don’t get me wrong; high-frequency inputs are important in any assessment of economic conditions and policy responses. They give you a sense of how the economy is functioning. They should inform and influence how officials think but not in the absence of a strategic view of our economic prospects.

QOSHE - A Fed Held Hostage by Data Is Asking for Trouble - Mohamed A. El-Erian
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A Fed Held Hostage by Data Is Asking for Trouble

23 1
01.03.2024

It’s right for economic data to influence the Federal Reserve’s policy approach. Yet, there is an important distinction between being informed by the numbers and being........

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