16 This view is a key aspect of many Committee participants’ reaction functions, including mine. Try saying that without referring to time. The authors acknowledge that the distinction between rules and discretion is too simple to capture the problems that monetary policymakers face. 17 I would say the same of the distinction between time-based and data-based forward guidance.
There are signs that risk premiums are too low – thus providing an incentive to take excessive risks. Firms’ profits are a reflection of the weak global real economic growth. By comparison, equity market valuations in Europe are currently close to, and those in the United States above, their average over the past 10 years.