Fed’s Clarida: Current framework serving the Fed well

WASHINGTON (Reuters) – The Federal Reserve’s current methods for meeting its inflation and employment goals are working well, though an upcoming review may come up with ways to “refine” them, Fed vice chair Richard Clarida said on Monday.

The current system “is serving the Fed well,” Clarida said in an interview on Bloomberg Television, when asked about alternate ways of meeting the Fed’s goals, such as allowing inflation to run persistently above the current 2 percent target to explicitly offset periods when it is chronically low.

Clarida will be overseeing a major review by the central bank of its “framework” for meeting the twin goals of maximum employment and stable prices. The review was ordered by Fed chair Jerome Powell to assess competing ideas for improving monetary policy in a world where interest rates may be permanently lower than before the 2007 to 2009 financial crisis and recession.

Clarida said of that review, “we are going to try to get a sense of ways we can perhaps refine our framework.”

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