The Fed's Miscalculations

The Fed's new framework was designed to encourage a modest overshoot of the 2% inflation target. No one was expecting 7% inflation, 12 months later in the private sector. They locked themselves into this very dovish new reaction function that was an extension of their framework. And then as I said, you have a desire now to prove that this new that you will be credible. The credibility is important when we're at the zero lower bound again.