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Progress and ConfusionThe State of Macroeconomic Policy$
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Olivier Blanchard, Raghuram G. Rajan, Kenneth S. Rogoff, and Lawrence H. Summers

Print publication date: 2016

Print ISBN-13: 9780262034623

Published to MIT Press Scholarship Online: January 2017

DOI: 10.7551/mitpress/9780262034623.001.0001

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Monetary Policy in the Future

Monetary Policy in the Future

Chapter:
(p.129) 13 Monetary Policy in the Future
Source:
Progress and Confusion
Author(s):

Ben Bernanke

Publisher:
The MIT Press
DOI:10.7551/mitpress/9780262034623.003.0013

This chapter discusses the monetary policy framework of the Federal Reserve Open Market Committee (FOMC). It argues that the current framework has improved the FOMC’s communication, has strengthened the anchoring of inflation expectations, and has given the Fed more scope to ease monetary policy in response to the global recession. The chapter discusses alternatives to the current framework, including adopting rules that would specify how the policy instrument should be set. It concludes with a discussion of policy tools, and argues that the new tools devised during the global recession will likely go back on the shelf once the zero lower bound is no longer a constraint.

Keywords:   monetary policy framework, inflation target, instrument rules, policy tools, zero lower bound

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