Richard H Clarida: The Federal Reserve's review of its monetary policy strategy, tools, and communication practices

Speech by Mr Richard H Clarida, Vice Chairman of the Board of Governors of the Federal Reserve System, at the "New England Perspectives on Fed Policymaking: A 'Fed Listens' Conference", hosted by the Federal Reserve Bank of Boston, Boston, Massachusetts, 13 May 2019.

The views expressed in this speech are those of the speaker and not the view of the BIS.

I am pleased to attend this Fed Listens event providing a New England perspective for the Federal Reserve's review of our monetary policy strategy, tools, and communication practices. We are bringing open minds to our review and are seeking a broad range of perspectives. To us, it simply seems like good institutional practice to engage with a wide range of interested individuals and groups as part of a comprehensive approach to enhanced transparency and accountability.

Motivation for the Review

The Congress charged the Federal Reserve with achieving a dual mandate-maximum employment and price stability-and this review will take this mandate as given. We will also take as given that a 2 percent rate of inflation in the price index for personal consumption expenditures is the operational goal most consistent with our price-stability mandate. While we believe that our existing strategy, tools, and communications practices have generally served the public well, we are eager to evaluate ways they might be improved. That said, based on the experience of other central banks that have undertaken similar reviews, our review is more likely to produce evolution, not a revolution, in the way we conduct monetary policy.