Monetary Policy Tactics and Strategy

Thank you for that kind introduction, Don. It is a pleasure to be with this esteemed group today. This morning, I’d like to talk about monetary policy, but before I do, I need to note that, as always, the views I express are my own, and do not necessarily coincide with the views of my colleagues within the Federal Reserve. I’d like to talk about monetary policy from two different perspectives: tactics and strategy. These obviously are two pertinent aspects of any sustained planning or decision-making endeavor, whether it involves public policy or the private goals of businesses or households. By tactics, I mean the decisions we make and the actions we take on a day-to-day, month-to-month, or, in the case of the Federal Open Market Committee, twice-a-quarter basis. Our most visible tactical decision is our choice of the federal funds rate. You have probably noticed that I have disagreed with many of my colleagues on this tactical choice at recent meetings, and I will say a few words later on about why.