Richard H Clarida: Models, markets, and monetary policy

Speech by Mr Richard H Clarida, Vice Chairman of the Board of Governors of the Federal Reserve System, at the Hoover Institution Monetary Policy Conference "Strategies for Monetary Policy", Stanford University, Stanford, California, 3 May 2019.

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

It is an honor and a privilege to participate once again in this annual Hoover Institution Monetary Policy Conference. The topic of this year's conference, "Strategies for Monetary Policy," is especially timely. As you know, the Federal Reserve System is conducting a review of the strategy, tools, and communication practices we deploy to pursue our dual-mandate goals of maximum employment and price stability. In this review, we expect to benefit from the insights and perspectives that are presented today, as well as those offered at other conferences devoted to this topic, as we assess possible practical ways in which we might refine our existing monetary policy framework to better achieve our dual-mandate goals on a sustained basis.

My talk today will not, however, be devoted to a broad review of the Fed's monetary policy framework-that process is ongoing, and I would not want to prejudge the outcome-but it will instead focus on some of the important ways in which economic models and financial market signals help me think about conducting monetary policy in practice after a career of thinking about it in theory.