Fed Chair Powell has announced the Fed will conduct a strategic review of monetary policy later this year. This article, co-written by Mickey D. Levy and Charles I. Plosser, focuses on the characteristics and failures of the strategic framework that the Fed adopted in 2020 and how this framework contributed to monetary policy mistakes and high inflation. It provides suggestions on issues the Fed should consider in its upcoming strategic review.
The paper was presented at the Hoover Monetary Policy Conference, which took place on May 2-3.
In addition to Levy and Plosser, other presenters in the session were Athanasios Orphanides (MIT), Jon Steinsson (Berkeley) and Larry Summers (Harvard). John Cochrane (Hoover Institution, Stanford University) moderated.
Article: The Fed’s Strategic Approach to Monetary Policy Needs a Reboot
Slides: The Fed’s Strategic Approach to Monetary Policy Needs a Reboot