Spoke with reporters on Friday conference call
He says:
- Price level target powerful tool for zero lower bound
- Fed should begin a debate on price level targeting
- good to carefully vet ideas before next recession
- optimal to have decision on best rate setting framework before next recession
- Wants serious debate over framework for federal ratesetting over next couple years
- In a world where underlying growth potential of the economy is hard to pin down, targeting a price level could be effective
- says officials don't know how fast the economy is capable of growing
- price level targeting aims for an inflation goal on average over a given time.
- He feels the Fed doesn't try to make up lost ground by running inflation above target if they've been under the goal for a prolonged period - like the US is currently experiencing
Current Fed chair Yellen has said that "THe FOMC is not actively considering these additional tools and policy frameworks, although they are important subjects for research"
Fed governor Brainard has also commented that "One risk is that the public, seeing elevated rates of inflation, may start to doubt that the central bank is still serious about its inflation target".
You can read the paper from William's by CLICKING HERE.
