Patrick Horan and David Beckworth on *The Fate of FAIT* and the Future of the Fed’s Monetary Framework
Macro Musings with David Beckworth
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Flexibility in Inflation Targeting
Before adopting fate, the Fed had stated that in situations where they deem the employment and price stability goals to be in conflict, they would be flexible. So is that really the definition of flexibility in some sense that the flexibility to look through supply shocks or does flexibility also have some other meaning? I think for the most part that is a key part of it. In advanced economies like the US and Europe, it's the case that inflation expectations were anchored and they had the luxury of seeing through it. And I think one of the challenges we face today is that credibility being challenged. That's why, you know, the Fed is responding. We're recording this and today the latest numbers came out
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