The so-called “framework review,” the second of what are now intended to be five-year periodic reviews of the U.S. central bank’s overall approach to monetary policy, will begin with discussions among policymakers starting in January, but will also look outside the institution through the conference and community events.
“We are open to new ideas and critical feedback, and we will take into account the lessons of the past five years and adapt our approach where appropriate to better serve the American people, to whom we are accountable,” said Fed Chairman Jerome Powell, in a statement.
Notably, the statement said the Fed’s 2% inflation target “will not be a focus of the review,” a likely disappointment to some in academic and analysis circles who feel that the specification of a target, and the level in which it is established, has become a problem for the central bank.
After a similar review in 2019, the Fed revised its framework in 2020 to put more emphasis on its employment goals, and to allow for a period of high inflation to offset times when inflation was too low, as it had been for much of the year. part of the 2010s and until the Covid pandemic.
Some have blamed that approach, and the way the Fed applied it, for slowing the central bank’s response to inflation when prices began to accelerate in 2021.
