Tags: Fed | asset | prices | probability

Fed's Kocherlakota Says Asset Prices Work as Signal of Future

Friday, 20 Sep 2013 02:14 PM

 

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Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said central bankers should use probabilities of outcomes derived from financial-market prices in their policy making.

“Policy makers need some way to gauge the relative likelihood of future events,” Kocherlakota said in slides prepared for a speech in New York. “For policymakers that care about social welfare, the relevant probability is a risk-neutral probability.”

He did not comment on the outlook for the U.S. economy or monetary policy in the slides of his remarks today.

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