Do not take market-based views at face value: San Francisco Fed

April 13, 2015 5:42 PM

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Do not take market-based views at face value: San Francisco Fed

SAN FRANCISCO (Reuters) - Federal Reserve policymakers should not read too much into financial market prices to glean the views of investors on interest rates or inflation because prices are hard to decipher, according to research released Monday by the San Francisco Fed.

"Fluctuations in risk and liquidity premiums and in other market forces complicate how market-based expectations are interpreted and used by policymakers — including central bankers," wrote Michael Bauer and Glenn Rudebusch, top researchers at the regional bank. "(Policy) cannot be formulated exclus...

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