The Fed: Lessons learned from the past three years

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 discussed 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 presented 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 presented 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.  A panel then discussed issues that the Fed should consider in its next framework review. Viewers submitted questions by emailing events@brookings.edu, on Twitter using the hashtag #FedFramework, and 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.

Past Event

Agenda

Director - The Hutchins Center on Fiscal and Monetary Policy

Senior Fellow - Economic Studies

C. Fred Bergsten Senior Fellow - Peterson Institute for International Economics

Session Materials

Former Brookings Expert

Aetna Professor of the Practice of Economic Policy - Harvard University

Nonresident Senior Fellow - Peterson Institute for International Economics

Session Materials

C. Lowell Harriss Professor of Economics and Professor of International and Public Affairs - Columbia University

Vice Chair (former) - Board of Governors of the Federal Reserve

Session Materials

Distinguished Senior Fellow - Economic Studies - The Brookings Institution

C. Fred Bergsten Senior Fellow - Peterson Institute for International Economics

C. Lowell Harriss Professor of Economics and Professor of International and Public Affairs - Columbia University

Vice Chair (former) - Board of Governors of the Federal Reserve

Former Brookings Expert

Aetna Professor of the Practice of Economic Policy - Harvard University

Nonresident Senior Fellow - Peterson Institute for International Economics

The Robert S. Kerr Senior Fellow - Economic Studies

Policy Director - The Hutchins Center on Fiscal and Monetary Policy

Professor of Economics - Brown University

Session Materials

Research Professor of Economics - Duke University

Senior Adviser (former) - Federal Reserve Board

Session Materials

Professor of Economics - Brown University

Robert V. Roosa Chair in International Economics

Senior Fellow - Economic Studies

Research Professor of Economics - Duke University

Senior Adviser (former) - Federal Reserve Board

Director - The Hutchins Center on Fiscal and Monetary Policy

Senior Fellow - Economic Studies

Distinguished Senior Fellow - Economic Studies - The Brookings Institution

C. Fred Bergsten Senior Fellow - Peterson Institute for International Economics

C. Lowell Harriss Professor of Economics and Professor of International and Public Affairs - Columbia University

Vice Chair (former) - Board of Governors of the Federal Reserve

Jerome and Dorothy Lemelson Professor of Management, Professor of Global Economics and Management - MIT-Sloan School of Management

Research Professor of Economics - Duke University

Senior Adviser (former) - Federal Reserve Board

Director - The Hutchins Center on Fiscal and Monetary Policy

Senior Fellow - Economic Studies

Session Materials

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