Clarida’s Strategy for Monetary Policy and Data Dependence
Yesterday, Fed Vice Chairman Richard Clarida laid out the broad strokes for a monetary policy strategy (see Data Dependence and U.S. Monetary Policy). He pointed out that while policy should be data dependent, data-dependency “is not, in and of itself, a monetary policy strategy.” Clarida sees a strategy as a way “to combine incoming data and a model of the economy with a healthy dose of judgment…to formulate, and then communicate, a path for the policy rate most consistent with our policy objectives.” In the attached Macro Quick Hit we make a few observations about his approach.
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