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Working Paper
Flexible Average Inflation Targeting: How Much Is U.S. Monetary Policy Changing?
One major outcome of the Federal Reserve’s 2019–20 framework review was the adoption of a Flexible Average Inflation Targeting (FAIT) strategy in August 2020. Using synthetic control methods, we document that U.S. inflation rose post-FAIT considerably more than predicted had the strategy not changed (an average of 1.18 percentage points during 2020:M8-2022:M2). To explore the extent to which targeting average inflation delayed the Fed’s response and contributed to post-FAIT inflation, we adopt a version of the open-economy New Keynesian model in Martínez-García (2021) and document the ...
The Fed’s New Monetary Policy Framework One Year Later
St. Louis Fed President James Bullard discusses the implementation of the FOMC’s new monetary policy framework, which includes flexible average inflation targeting.
Journal Article
The Fed’s New Monetary Policy Framework One Year Later
St. Louis Fed President James Bullard discusses the implementation of the FOMC’s new monetary policy framework, which includes flexible average inflation targeting.