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Calibrating Monetary Policy

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Abstract

The new SF Fed Policy Calibration Tool is designed to help construct a monetary policy path that aligns with one’s views of the economy and policy objectives. Applying the tool to recent tariff increases shows that preferred policy paths vary depending on one’s assessment of the economic effects of tariffs. If tariffs predominantly affect demand, more policy accommodation may be warranted; if they predominantly affect supply, less accommodation may be appropriate. The high uncertainty surrounding these effects implies a wide range of possible scenarios for the best course of action.

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  • Régis Barnichon & Aayush Singh, 2026. "Calibrating Monetary Policy," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, vol. 2026(17), pages 1-5, June.
    • Handle: RePEc:fip:fedfel:103472
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    References listed on IDEAS

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    1. Jason Choi & Taeyoung Doh & Andrew Foerster & Zinnia Martinez, 2022. "Monetary Policy Stance Is Tighter than Federal Funds Rate," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, vol. 2022(30), pages 1-5, November.
    2. Emi Nakamura & Jón Steinsson, 2018. "Identification in Macroeconomics," Journal of Economic Perspectives, American Economic Association, vol. 32(3), pages 59-86, Summer.
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