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Past Event

Should the Fed stick with the 2 percent inflation target or rethink it?

Past Event

Introduction & Why it's time to re-think the 2 percent target

Introduction & Why it's time to re-think the 2 percent target
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Introduction & Why it's time to re-think the 2 percent target

The options: Keep it, tweak it, or replace it
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The options: Keep it, tweak it, or replace it

What difference does a monetary framework make? And to whom?
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What difference does a monetary framework make? And to whom?

Next steps: Learning from the Bank of Canada
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Next steps: Learning from the Bank of Canada

There is debate (mainly among those familiar with monetary policy issues) about the wisdom of keeping or changing the 2 percent inflation target. This is likely to be a continuing conversation that’ll continue under the new Fed chair. Much of the discussion is from advocates of one or another alternative making their pitch.

On January 8, the Hutchins Center on Fiscal and Monetary Policy at Brookings brought advocates of several alternatives (including sticking with 2% target) together to present their case and to challenge the others. The discussants weighed in on whether and how the choice of a target might matter for the actual policy path and the results for the economy. Important aspects of the discussion focused on the effects of alternatives on the clarity of Fed communication and on setting expectations and on the process by which the legislature holds the Fed accountable for results. The debate was grounded in serious analysis, clarified some issues, created a baseline for what’s likely to be a continuing conversation and considered a process by which the Fed can address this important question.

Read John Taylor’s remarks about the event on his blog.

Agenda

Why it's time to re-think the 2 percent target

Lawrence H. Summers

Charles W. Eliot University Professor and President Emeritus - Harvard University

The options: Keep it, tweak it, or replace it

Jeff Frankel

James W. Harpel Professor of Capital Formation and Growth - Harvard University

What difference does a monetary framework make? And to whom?

John Taylor

Mary and Robert Raymond Professor of Economics - Stanford University

Peter Hooper

Managing Director, Chief Economist - Deutsche Bank Securities

Next steps: Learning from the Bank of Canada

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