Federal Reserve Chair Jerome Powell has indicated that the central bank’s communication will be part of its 2025 monetary policy review. That makes sense because Fed communication shapes market expectations about the future path of interest rates and affects financial conditions — key transmission channels of monetary policy.

The Powell-led Fed has generally received favorable grades on communication from academic economists and market participants. A 2024 Brookings Institution survey gave the Fed a median grade of B+, slightly lower than its 2020 survey but up from a B- score in 2016. More recently, however, criticism has increased. At last month’s press conference, many noted the dissonance between the Fed’s decision to cut rates versus the revisions to its forecasts showing solid economic growth and higher inflation in 2025.

© Bloomberg