Fed Governor Clarida speaking:
- no liftoff until inflation sustained at 2%
- Fed to keep assessing the effectiveness of bond buying
- useful to summarize a new framework and forward guidance as temporary price level targeting that reverts to flexible inflation targeting after conditions for liftoff reached
- in judging appropriate moment for liftoff he says he plans to focus more on indicators of inflation expectations - especially survey-based measures - then a calculated average inflation rate over particular time
- large-scale asset purchases are providing substantial support to economic recovery
- Fed will continue to monitor developments and assess how asset purchases can best support of achieving its objectives
- under new framework, maximum employment would not be assessed on unemployment rate alone
- new framework would also take into account other measures such as labor force participation and prime age employment to population ratios
- policy will not tighten solely because the unemployment rate has fallen below any particular econometric estimate of its long-run natural level
- new framework represents an evolution, not revolution
- Fed committed to using all available tools – not just funds rate and forward guidance, but also large-scale asset purchases – to achieve goals
