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Macro Musings with David Beckworth
Loretta Mester on How to Improve the Fed’s Operating Framework
Nov 11, 2024
Loretta Mester, President and CEO of the Federal Reserve Bank of Cleveland, discusses her extensive career in the Federal Reserve System. She delves into the impact of inflation on low-income households and the Fed's challenging balance between controlling it and promoting employment. Mester also explores the Flexible Average Inflation Target (FATE) and its implications for monetary policy, emphasizing the need for robust frameworks that adapt to evolving economic landscapes. Her insights provide a fascinating look into the complexities of modern monetary policy.
56:04
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Quick takeaways
- Loretta Mester emphasizes the critical role of community engagement in shaping effective monetary policy, particularly during periods of high inflation.
- The complexities of the Fed's ample reserves operating system reveal challenges that necessitate continual adjustments and additional facilities for interest rate stability.
Deep dives
Loretta Mester's Journey into Economics
Loretta Mester’s entry into economics was somewhat unconventional as she began her education in mathematics before adding economics as a second major at Barnard College. Initially intending to pursue graduate studies in mathematics, she received encouragement from Princeton professors to consider their economics program, leading her to shift her path. After obtaining her Ph.D., she accepted a position at the Philadelphia Fed, where she discovered the unique blend of academic research and policy work that defined her career. This foundation eventually propelled her into the role of president at the Cleveland Fed, marking her significant influence on monetary policy.
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Discover
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