Searcher
Searcher
See main menu
Type 2 or more characters for results.

Published on Thursday, August 27, 2020 | Updated on Thursday, August 27, 2020

Fedwatch: Powell shifts focus from “stars” to transparency and inclusiveness

Summary

The Fed released its updated Statement on Longer-Run Goals and Monetary Policy Strategy, which reflect changes in the economy over the past decade and explains how policymakers are planning to conduct monetary policy. The statement also enhances transparency, accountability and effectiveness of monetary policy.

Key points

  • Key points:
  • The FOMC emphasized that maximum employment is a broad-based and inclusive goal and its policy decisions will be informed by its "assessments of the shortfalls of employment from its maximum level." The original document referred to "deviations from its maximum level."
  • On price stability, the FOMC adjusted its strategy for achieving its longer-run inflation goal of 2 percent by noting that it "seeks to achieve inflation that averages 2 percent over time." The revised statement states that "following periods when inflation has been running persistently below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time."
  • The updates to the strategy statement explicitly acknowledge the challenges for monetary policy posed by a persistently low interest rate environment. Here in the United States and around the world, monetary policy interest rates are more likely to be constrained by their effective lower-bound than in the past.

Geographies

Topics

Documents and files

Report (PDF)

Fed-Powell-27Aug20.pdf

English - August 27, 2020

Authors

NK
Nathaniel Karp
BN
Boyd Nash-Stacey
New comment
Log in to join the debate and interact with our team of economists.

Be the first to add a comment.

You may also be interested in