Improving U.S. Monetary Policy Communications

61 Pages Posted: 20 Aug 2019

See all articles by Stephen G. Cecchetti

Stephen G. Cecchetti

Brandeis International Business School; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Kermit Schoenholtz

New York University (NYU) - Leonard N. Stern School of Business

Date Written: August 2019

Abstract

The Federal Open Market Committee (FOMC) publishes vast amounts of information regarding monetary policy, including its goals, strategy and outlook. By reinforcing the commitment to price stability and maximum sustainable employment, this transparency has helped improve U.S. economic performance in recent decades. Based on two dozen interviews with policy experts, we identify three objectives that guide our search for further improvements in communications practices: simplifying public statements, clarifying how policy will react to changing conditions, and highlighting uncertainty and risks. As examples, we propose a simpler post-meeting policy statement and the introduction of a concise Report on Economic Projections, the elements of which are mostly available in existing publications. A broader, systematic application of these objectives could also help the FOMC streamline other aspects of its communications framework.

Keywords: central bank accountability, central bank communication, Federal Reserve, forward guidance, monetary policy, Monetary policy credibility, Policy Transparency, Reaction functions

JEL Classification: E50, E58, E61

Suggested Citation

Cecchetti, Stephen G. and Schoenholtz, Kermit, Improving U.S. Monetary Policy Communications (August 2019). CEPR Discussion Paper No. DP13915, Available at SSRN: https://ssrn.com/abstract=3439469

Stephen G. Cecchetti (Contact Author)

Brandeis International Business School ( email )

415 South Street
Waltham, MA 02453
United States

National Bureau of Economic Research (NBER) ( email )

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Cambridge, MA 02138
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212-720-8629 (Phone)
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Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Kermit Schoenholtz

New York University (NYU) - Leonard N. Stern School of Business ( email )

Suite 9-160
New York, NY
United States

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