Perspectives on monetary policy and the framework review

Abstract

A panel discussed potential desirable changes in the Federal Reserve’s policy framework in light of recent experience. Issues raised included communication about when the effective lower bound is reached, the relative merits of flexible average inflation targeting and flexible inflation targeting, and the use of QE and QT policy. Emphasis was placed on the need to carefully consider the weights placed on the inflation and employment mandates, especially in light of supply shocks, the need to carefully distinguish between balance sheet actions designed to stabilize markets and those used as stimulus in an effective lower bound environment, and the need to recognize the price level impact of inflation running higher than target.