It’s Time to Reexamine Monetary Policy Rules
- Author urges the Federal Reserve to adopt a transparent monetary-policy rule.
- He links discretionary policy to inflation and past economic instability.
- Rules should guide decisions, with explained exceptions for emergencies.
The article argues that the US Federal Reserve should reconsider adopting a formal monetary-policy rule to make interest-rate decisions more predictable and accountable. Its author, former congressman Jeb Hensarling, says recent inflation misses and the Federal Reserve’s discretionary approach show the need for reform under Chair Kevin Warsh.…