NY Fed’s Williams advocates change to inflation-targeting framework

L to R: Central Banking’s Christopher Jeffery and John Williams
John Williams: advocates the introduction of price-level targeting
Shell Jiang

Federal Reserve Bank of New York president John Williams advocates changing the way the Fed targets inflation in a new staff paper. The publication comes ahead of the Fed’s plan to review its monetary policy framework this year.

Williams criticises the current framework for anchoring expectations below the inflation target, “which, in turn, exacerbates the deleterious effects of the lower bound on the economy”, he writes with co-author Thomas Mertens.

The Fed can mitigate this issue by

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