Three questions on the minds of policymakers at the Federal Reserve as they review the central bank’s efforts in communicating interest-rate policy strategy and actions were outlined Tuesday by the agency’s chairman, who was opening a first-ever public conference on the subjects.
In his opening remarks, Federal Reserve Board Chairman Jerome H. (“Jay”) Powell said the central bank’s review of its policies in setting interest rates (through its Federal Open Market Committee [FOMC]) is focused on three questions:
- Can the Federal Reserve best meet its statutory objectives with its existing monetary policy strategy, or should it consider strategies that aim to reverse past misses of the inflation objective?
- Are the existing monetary policy tools adequate to achieve and maintain maximum employment and price stability, or should the toolkit be expanded?
- How can the FOMC’s communication of its policy framework and implementation be improved?
“These questions are quite broad, and my colleagues and I come to them with open minds,” Powell said. “We believe our current policy framework is working well, and we have made no decisions about particular changes. In fact, the review is still in its early stages.”
Tuesday’s conference in Chicago (the “Conference on Monetary Policy Strategy, Tools, and Communications Practices,” sponsored by the Fed and the Federal Reserve Bank of Chicago) is part of an overall process by the Fed to review its communications strategies and policies surrounding FOMC decisions on rates. The Fed is also conducting, Powell reminded the group, a series of “Fed Listens” events around the country to “help us understand the perspectives of people from diverse backgrounds and with varied interests.”
Powell said that, beginning later this year, the FOMC will devote time at a series of its regular meetings to assess lessons from Tuesday’s and other events, supported by staff analysis performed throughout the Federal Reserve. He said the agency will publicly report the outcome of its discussions.