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US Monetary Policy and the Return to Price Stability

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  • Richard H. Clarida

Abstract

This paper assesses the proximate causes of the post pandemic surge in US inflation, the Federal Reserve's real time reaction to and interpretation of incoming data in 2021, and the pivot to raising rates and shrinking the balance sheet that commenced in 2022 and continues in 2023. Particular attention is devoted to the role, if any, that Fed's August 2020 revisions to its monetary policy framework may have played in delaying lift - off relative to counterfactuals informed by simple policy rules, including a framework - consistent "shortfalls" policy rule featured in its semi - annual Monetary Policy Reports.

Suggested Citation

  • Richard H. Clarida, 2023. "US Monetary Policy and the Return to Price Stability," NBER Working Papers 31520, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:31520
    Note: ME
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    Cited by:

    1. Athanasios Orphanides, 2023. "The Forward Guidance Trap," IMES Discussion Paper Series 23-E-06, Institute for Monetary and Economic Studies, Bank of Japan.

    More about this item

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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