No monetary policy at face value

In a speech given on February 11, 2017, the US Federal Reserve (Fed)’s Vice-chairman Stanley Fischer provided several precious clues about how the Fed – and notably its Federal Open Market Committee (FOMC) – takes its decisions. Considering that the economy is very complex, Fischer explained that it’s essentialto be able to adapt (your) models promptly and accurately in real time.” In fact, “no one model or policy rule can capture the varied experiences and views brought to policymaking by a committee” such as the FOMC. As a result, concluded Fischer, it is recommended to not “accept the prescriptions of any one model or policy rule at face value.”