The Fed: Lessons learned from the past three years

A summary of the presentations and discussions of this event is available here.

The past three years have been challenging for the Federal Reserve: a pandemic, a recession, large doses of fiscal stimulus, a surge of inflation that proved more persistent than many anticipated, a very tight labor market, the economic ripples of the Russian invasion of Ukraine, a banking crisis. All that was accompanied by a new framework for monetary policy that redefined its inflation goal (now defined as “inflation that averages 2% over time”) and maximum employment (now defined as a broad-based and inclusive goal) with a policy focus on shortfalls from that goal. By most accounts, the Fed was slow to raise interest rates to thwart inflation, which then led the central bank to lift rates unusually rapidly beginning in 2022.

On Tuesday, May 23, the Hutchins Center on Fiscal & Monetary Policy at Brookings will discuss lessons that the Fed should draw from the past three years, and what issues it should consider when it revisits the framework, as it has promised to do every five years.

Brookings’ Ben Bernanke and Olivier Blanchard of the Peterson Institute for International Economics will present a paper on what drove the inflation that was much greater and persistent than Fed forecasters anticipated. Don Kohn of Brookings and Gauti Eggertsson of Brown University will present a paper on how the Fed’s approach to using its monetary policy tools over the past few years may have contributed to the inflation overshoot. Then, we’ll convene a panel to discuss issues that the Fed should consider in its next framework review. Viewers may submit questions by emailing [email protected], on Twitter using the hashtag #FedFramework, or at sli.do using the code #FedFramework.

Registration is required to attend an event in person and guests at Brookings are required to attest to their state of health before attending. Visitors may not enter the building if they are feeling ill for any reason, have any symptoms commonly associated with COVID-19, or have tested positive for COVID-19 at any time in the preceding 14 days.