Stanley Fischer: Committee decisions and monetary policy rules

Speech by Mr Stanley Fischer, Vice Chair of the Board of Governors of the Federal Reserve System, at "The Structural Foundations of Monetary Policy", a Hoover Institution Monetary Policy Conference, Stanford University, Stanford, California, 5 May 2017.

It is a pleasure to be at the Hoover Institution again. I was privileged to be a Visiting Scholar here from 1981 to 1982. In addition, many of the researchers and practitioners with whom I have discussed monetary policy over the years have had affiliations with the Hoover Institution-including several people here today. It is a pleasure also to have been invited to speak at this Hoover Institution Monetary Policy Conference, for the Hoover conference series provides a valuable forum for policymakers and researchers to engage in dialogue about important monetary policy issues facing the United States and other countries.

Today I will offer some observations on monetary policy rules and their place in decisionmaking by the Federal Open Market Committee (FOMC). I have two messages. First, policymakers should consult the prescriptions of policy rules, but-almost needless to say-they should avoid applying them mechanically. Second, policymaking committees have strengths that policy rules lack. In particular, committees are an efficient means of aggregating a wide variety of information and perspectives.