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Evolution of the FOMC's Forward Guidance

Here's another interesting graphic in regards to the Fed's "forward guidance" on interest rates, one of its unconventional monetary policy tools. Here we get a nice recap of the evolution of this tool from Barclays.

While the main headlines and chatter is about the size of tapering, market participants will also be keeping a very close eye on what the Fed has to say in regards to how it will decide to raise interest rates going forward. Will they push forward their 6.5% unemployment rate target, or will the FOMC add in language that takes into account the fact that some of the fall in the unemployment rate is due to a weaker participation rate. If they do it will be considered "dovish", which could mean a further weakness in the USD even if there is a $10billion or so tapering.

- Nick