Says Bernanke: By watching financial markets
and listening to the views of market participants, FOMC members are able to know with considerable accuracy what the markets expect for monetary policy. This information helps Committee members deduce how their own actions and statements are likely to affect asset prices and yields.
Indeed, many would say that the Fed "follows the market's expectations" too closely! Does the Fed exist solely to satisfy Wall Street? Or is it's duty to the ordinary citizen....?
