Reuters — Fed plans major review of how it pursues inflation, employment goals

The Federal Reserve will conduct an extensive review next year of how it tries to guide the U.S. economy, the U.S. central bank said on Thursday.

“Now is a good time to take stock of how we formulate, conduct, and communicate monetary policy,” said Federal Reserve Chairman Jerome Powell, noting that the Fed was close to meeting its goals of maximum employment and a 2 percent inflation rate. 

In a statement, the Fed said it would reach out to a “broad range” of stakeholders and that it planned to host a research conference in June to support the review. The research conference will be held at the Federal Reserve Bank of Chicago.

Admission that current policy is not working?

Reuters
Fed plans major review of how it pursues inflation, employment goals

Jeff Cox — The Fed is making a major shift in rate policy

Goodbye forward guidance?

CNBC NetNet

The Fed is making a major shift in rate policy

Jeff Cox | Finance Editor

Brad Delong — So Now the Federal Reserve Has a Triple Mandate: Good to Know

Janet Yellen: FRB: Press Release--Statement by Federal Reserve Board Vice Chair Yellen on her nomination by President Obama--October 9, 2013:

"...I pledge to do my utmost to keep that trust and meet the great responsibilities that Congress has entrusted to the Federal Reserve--to promote maximum employment, stable prices, and a strong and stable financial system."

Grasping Reality with Every Possible Tentacle
So Now the Federal Reserve Has a Triple Mandate: Good to Know
J. Bradford DeLong | Professor of Economics, UCAL Berkeley

Well, at least she is clear on who she is working for.

Matias Vernengo — Fed up with the full employment target?

The debate on Bernanke's views on inflation targeting -- whether it should be 2 or 4% -- as I noted in a previous post is peculiar, to say the least. After all the Fed has a dual mandate, and inflation preoccupations have to be tempered by the pressing question of unemployment. The preoccupation in some quarters is that the Fed already has already accepted as a matter of fact that it has single mandate (see here and here). It seems to me that critics (e.g. Krugman, DeLong and others) are correct for the wrong reasons.

Read it at Naked Keynesianism
Fed up with the full employment target?
by Matias Vernengo | Associate Professor, University of Utah

Favorite lines: <i>Full employment has not been a target, but keeping workers demands for higher wages checked has been very much part of the reaction function. Jamie Galbraith has written about it (go here for a technical paper). So the Fed has a single target mandate, but is not an inflation target, it is a "fear of full employment target"."</i>

Michael Stephens — Bernanke Visits Alternate Universe

Read it at Multiplier Effect
Bernanke Visits Alternate Universe
by Michael Stephens

The alternative universe is Sen Charles Grassley (R-IA). As someone who has lived in Iowa for some time, I can attest that Sen Grassley does indeed represent an alternative universe. It is interesting, though. Sen. Grassley does know what the Fed's mandate is. I guess his staff prepped him.

Michael Stephens — The “Shovel Ready” Excuse and a Fed for Public Works?

Back in 2009 Martin Shubik sketched out a plan in a Levy Institute policy note for creating a “Federal Employment Reserve Authority“—a kind of Fed for employment (yes, I know:  the Federal Reserve is the “Fed for employment.”  But you don’t need to look very hard to see that the sides of the dual mandate aren’t equally weighted).  Among other things, the FERA would maintain state branches that are charged with keeping updated and prioritized lists of potential public works projects (with a preference for self-liquidating projects) and providing constant monitoring and evaluation so that financing can be put in place as soon as unemployment reaches a particular trigger level in that region.  Regional public investment would respond to objective employment conditions.

Read it at Multiplier Effect
The “Shovel Ready” Excuse and a Fed for Public Works?
by Michael Stephens