Fed Vice Chair Richard Clarida said in a speech that the US economy is “operating at or close to maximum employment and price stability.” But, “although the labor market is robust, there is no evidence that rising wages are putting excessive upward pressure on price inflation”. Wages growth is “broadly in line with productivity growth and underlying inflation”.
He added that Fed’s monetary policy framework review seek to answer three questions:
- Can the Federal Reserve best meet its statutory objectives with its existing monetary policy strategy, or should it consider strategies that aim to reverse past misses of the inflation objective?
- Are existing monetary policy tools adequate to achieve and maintain maximum employment and price stability, or should the toolkit be expanded? And, if so, how?
- How can the FOMC’s communication of its policy framework and implementation be improved?