Interest rate policy works to sustain price stability by stabilizing production costs against shocks to current productivity and future income prospects. The Fed should publicly target core PCE inflation in a 1 to 2 percent range to improve short-run communications and lock in credibility for...

Credibility for low inflation is the cornerstone of an effective monetary policy. And public support for Fed independence is the foundation of that credibility. Fed intervention in foreign exchange markets creates doubt about whether monetary policy will pursue low inflation or exchange rate...

This article discusses a technical aspect of the Federal Reserve's monetary targeting procedure that has come to be known as "base drift." The Fed has been announcing larger ranges for the growth of M1 and other monetary aggregates since 1975. These ranges have been expressed in terms of rates...

This article discusses a technical aspect of the Federal Reserve's monetary targeting procedure that has come to be known as “base drift.” The Fed has been announcing target ranges for the growth of M1 and other monetary aggregates since 1975. These ranges have been expressed in terms of...