Mervyn King Is Not a Great Fan of Forward Guidance

The transcript discusses the Federal Reserve's challenges in maintaining a predictable reaction function amid low inflation and economic recovery. It critiques the concept of forward guidance, emphasizing the need for clarity in how the Fed responds to economic changes rather than predicting future interest rates.

What challenges does the Fed face in creating certainty about its reaction function?

How has low inflation affected the Fed's decision-making process?

Why is it considered unwise to talk too much without a clear understanding of future directions?

What is the significance of forward guidance in the context of central banking?

What approach does the speaker suggest for responding to economic events as they unfold?