Central bankers no longer have the luxury of being able to "mumble on occasion," which many were prone to do in the past, a top Federal Reserve official said today.
Dallas Federal Reserve Bank President Richard Fisher said "increasingly sophisticated" businesses and financial markets need "a certain degree of transparency and clarity" to manage risk. "In most central banks, there has traditionally been a premium paid for being opaque," Fisher said in remarks to the US-China Business Council here.
"Alas, obscurity is not our privilege in the reality show that is today's financial world," he said.
Fisher made no comments on current monetary policy.
That the United States is now predominantly a service economy, in contrast to China's agriculture and manufacturing predominance, is potentially good for the United States, Fisher said.
"As China grows--and clearly its manufacturing sector is fueling a very fast growth rate--we know its demand for services will increase even faster. This is good news for US services businesses, because we are king of the global services providers," he said.
At the same time, the growth of services in the US makes the Federal Reserve's job harder because service output and prices are harder to measure.
"Our inability to fully distinguish between quality improvements and inflation in services means that when we look at growth in nominal GDP, we can't be entirely sure how much results from the gains in real output and how much is inflation," he said.
US economic statistics are over-focused on goods production and are in need of better services measurement, he added.