Marketplace All-in-One What's in a framework?
Aug 22, 2025
The annual Federal Reserve meeting in Jackson Hole is a hot topic, with Fed Chair Jerome Powell's monetary policy speech drawing keen attention. A new five-year framework for interest rates is on the horizon, raising questions among economists. Meanwhile, amidst high mortgage rates and economic uncertainty, first-time homebuyers display remarkable resilience, adapting to a challenging housing market. With improved credit scores and a focus on affordable neighborhoods, these buyers are defying the odds and carving paths to homeownership.
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Fed Updates Its Guiding Framework Regularly
- The Fed issues a policy framework about every five years to guide inflation and employment decisions.
- The 2012/2020 frameworks shifted targets and strategies as inflation dynamics changed, showing the Fed adapts its guiding rules over time.
Average Inflation Targeting Is Under Review
- The 2020 change leaned into average inflation targeting to make up for past low inflation.
- Now that inflation is stubbornly above 2%, Fed officials expect to revise or undo parts of that approach.
Powell Expected To Announce Framework Changes
- Chair Jerome Powell was expected to unveil a new framework reflecting current inflation realities.
- Fed officials, including Claudia Somm, say flexibility is needed amid persistent inflation and uncertain future disinflation risks.