As Blinder graphically puts it, ‘central bankers must steadfastly resist such whimsy and inoculate themselves against the faddish behaviour that so often dominates markets. That may be why central bankers are not much fun at parties’. Finally, he argues that market traders tend to have much shorter time horizons than central bankers.
This is even the case where long-term bonds are traded, but are in fact treated as shorter-term instruments. The result is that by following the market, monetary policy could land up having a short time horizon and be prone to overreaction. It is important for monetary policy to maintain a focus on the medium term.