Introducing the Kansas City Fed's Measure of Policy Rate Uncertainty (KC PRU).

The article introduces the Kansas City Fed's Measure of Policy Rate Uncertainty (KC PRU), which aims to measure uncertainty about future policy rates using financial options prices. The KC PRU is calculated daily and has shown correlations with changes in policymakers' communication strategies and macroeconomic events. The measure indicates a recent increase in policy rate uncertainty, attributed to factors such as inflation outlook, large increases in the funds rate, and regional banking stresses. Overall, the KC PRU provides a timely and consistent measure of policy rate uncertainty, reflecting historical movements and recent developments. [Extracted from the article]