Public Expects More Accommodation than FOMC: Report

The public expects monetary policy to be more accommodative than Federal Open Market Committee members do, and the public doesn't fully weight the import of data, according to Federal Reserve Bank of San Francisco researchers.

"Our analysis shows that, on balance, the public seems to expect more accommodative policy than FOMC participants," write Jens H.E. Christensen, a senior economist in the Economic Research Department of the Federal Reserve Bank of San Francisco, and Simon Kwan a vice president of financial research in the same department. "One measure of uncertainty also shows the range of the public's forecasts is somewhat smaller than that among FOMC participants, suggesting the public also may be less uncertain about their projections."

Using the monthly Blue Chip Financial Forecast and the Survey of Primary Dealers to gauge opinion, noting the data are from "a rather small set of market professionals," so they also examined the market clearing price of federal funds futures.

In its Economic Letter, the researchers write, "However, an important concern is that the public might not give enough weight to how dependent the central bank's guidance is on both current and incoming data. Thus, the public could underestimate the conditionality and uncertainty of interest rate projections."