Fed’s new framework splits opinion

Former Fed staff offer mixed reactions to AIT; most call for more refined communication

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The introduction of the US Federal Reserve’s new monetary policy framework has split opinion among former Fed officials and economists about whether the benefits outweigh the costs. Some argue flexible average inflation targeting (AIT) will provide greater clarity about the central bank’s reaction function and will help to rebalance expectations after years of downward inflationary bias. Others, though, say the framework has significantly reduced decision-making transparency and risks unhinging

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