Fed VC Clarida said the review of monetary policy strategies
Fed VC Clarida said the review of monetary policy strategies is more likely to be an evolution rather than a revolution in the conduct of policy, in his text on The Federal Reserves's Review of Its Monetary Policy Strategy, Tools, and Communication Practices. Policymakers remain open minded. Given that the neutral rate appears to have fallen, there is increased likelihood that the lower rate bound is again hit in future economic downturns, was a motivating factor behind this study. He also noted the reduced responsiveness of inflation to resource slack, and he reminded it's "all the more important" that longer run inflation expectations are anchored at levels consistent with the 2% inflation goal. With the economy currently operating near the Fed's dual goals, this is a good time for this study.