Fed to revamp its forward guidance

At the policy meeting due to end on Wednesday 19th March, the Fed will almost certainly reduce the size of its monthly asset purchases by a further $10bn, to $55bn, and will probably abandon the 6.5% unemployment rate threshold in favour of using a wider range of labour market indicators. This new form of forward guidance, however, may be more vague and complicated than necessary given that the Fed could just anchor rate expectations by placing more emphasis on its own interest rate projections.