Journal Article

Have Lags in Monetary Policy Transmission Shortened?

Abstract: The Federal Open Market Committee’s monetary policy has expanded beyond changing the federal funds rate to include forward guidance and balance sheet policy. Using these tools may shorten lags in monetary policy transmitting to inflation. Using a proxy funds rate that incorporates tightening from these additional policy tools, we find evidence of a shorter lag in policy transmission to inflation since 2009, though with high associated uncertainty.

Keywords: Federal Reserve; federal funds; Federal Open Market Committee (FOMC);

JEL Classification: E52; E58;

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Bibliographic Information

Provider: Federal Reserve Bank of Kansas City

Part of Series: Economic Bulletin

Publication Date: 2022-12-21

Issue: December 21, 2022

Pages: 3