I'd take the opposite tack.
The thing that the Fed needs to do is reduce the surprise, not increase it. After all, the current set up is a lot better than the way things used to be, where the Fed wouldn't even disclose what the target Fed funds rate was. They let the market guess, instead. Less surprise means less uncertainty, which I think is good for the markets.
Then, the next step would be to eliminate the Fed, and replace it with a computer. Unfortunately, that step is a little extreme for the boys and girls in Washington. Perhaps once this cycle has run its course, they'll be a little more receptive to the idea, especially if Greenspan reveals after his retirement that all he was doing was reacting to market rates.
Then again, I'm not sure that Greenspan's ego would permit that, either. |
