The biggest policy mistake that central bankers do not want to make is "premature normalization", the action of starting to raise rates to end the QE cycle before it is appropriate.
No one wants to commit the original sin of the Great Depression when monetary policy was too tight. We must always remember the apology to Milton Friedman from Ben Bernanke. Any Fed proxy will not commit the action of being too tight. The forward commitment is that the Fed will always err on the side of being too loose. All expectations have to be filtered through this bias. There has been nothing to change this view.
No one wants to commit the original sin of the Great Depression when monetary policy was too tight. We must always remember the apology to Milton Friedman from Ben Bernanke. Any Fed proxy will not commit the action of being too tight. The forward commitment is that the Fed will always err on the side of being too loose. All expectations have to be filtered through this bias. There has been nothing to change this view.
The hallmark of monetary policy since the Financial Crisis is the premise that the Fed will not make the premature normalization mistake.
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