MNI BRIEF: Mester Suggests Fed Say More In Policy Statement

The Federal Reserve should say more in its policy statements and explain how risks to its outlook could change the interest rate path, as well as link each policymaker's economic outlook to his or her policy path in the dot plot, Cleveland Fed President Loretta Mester said Tuesday.

"It would be preferable for policymakers to take control of the narrative by using more words to describe the current assessment of economic developments, how they have influenced the outlook, and the risks to that outlook," she said in remarks prepared for a Bank of Japan conference. "Scenario analysis" should be a standard part of communications, as discussion of potential risks to the outlook would help the public understand how policy could deviate from the most likely path, she said. (See: MNI INTERVIEW: Fed Likely To Wait And See On Scenarios - Bordo)

"Explicit forward guidance about the rate path should be used judiciously and only in extraordinary times," she cautioned.