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Federal Reserve Bank of Cleveland
Annual Report
Rhetoric aligned with theory: talking productively about interest rates

If the recession that began in March 2001 has ended, as many believe, it will be hard to oppose the sentiment that the U.S. economy has navigated some fairly treacherous waters with minimal damage. To many, no doubt, the 475 basis point reduction in the federal funds rate engineered by the FOMC will be one of the heroes of the recovery–expansion story. Should we not, then, re-evaluate the position this Bank has taken in the past—that policymakers should keep their eyes on long-term objectives rather than reacting to perceived, short-term gaps between output and its “potential”?

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anonymous, "Rhetoric aligned with theory: talking productively about interest rates" , Federal Reserve Bank of Cleveland, Annual Report, pages 6-16, number y:2001:p:6-16, 2001.
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Keywords: Monetary policy; Economic conditions; Federal funds rate
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