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 Bank of Finland Conference on Monetary Policy and Future of EMU (Economic and Monetary Union)", Helsinki, 1 July 2019.

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

I am delighted to be in Helsinki at this important conference on monetary policy and the future of Europe's monetary union. Today I would like to discuss the broad review of the Federal Reserve's monetary policy framework that my fellow policymakers and I are undertaking this year. We are examining the policy strategy, tools, and communication practices that we use to pursue our dual-mandate goals of maximum employment and price stability. In my remarks, I will describe the motivation for and scope of this review and discuss some of the events that are taking place. In our review, we are being transparent and open minded, and we are seeking perspectives from a broad range of interested individuals and groups, including academics, other specialists, and the public at large.

Motivation for the Review

The fact that the Federal Reserve is conducting this review does not suggest that we are dissatisfied with the existing policy framework. Indeed, we believe our existing framework has served us well, helping us effectively achieve our statutorily assigned dual-mandate goals. Nonetheless, in light of the unprecedented events of the past decade, we believe it is a good time to step back and assess whether, and in what possible ways, we can refine our strategy, tools, and communication practices to achieve and maintain these goals as consistently and robustly as possible. I note that central banks in other countries have conducted periodic reviews of their monetary policy frameworks, and their experience has informed the approach we are pursuing.