IYY - A (Un)Certain Framework
2024-04-17 04:00:00 ET
Summary
- The FOMC has been using a varied set of targets for monetary policy, but the relevance of these data points is questioned.
- The FOMC has shifted away from specific metrics and adopted a more ambiguous strategy, focusing on caution and confidence.
- Inflation risks are seen as skewed higher, leading to a cautious approach by the FOMC in their pursuit of achieving inflation targets.
By Samuel Rines
When it comes to articulating data related to monetary policy outcomes, the FOMC has conveyed an awkwardly varied set of targets. In mid-2022, then Vice-Chair Lael Brainard articulated that the labor market needed to come into "better balance" before rate hikes would cease . Later in the year, Chair Powell brought "core services ex-shelter" to prominence in the pursuit of taming inflation. Call them the "intertwined two" guideposts for monetary policy....
A (Un)Certain Framework