Monetary Policy in a Low Inflation Environment

  title={Monetary Policy in a Low Inflation Environment},
  author={J. Alfred Broaddus},
Hard-won credibility is crucial to the Fed's two-pronged strategy of combining the maintenance of price stability with active short-term countercyclical interest rate policy. In recent years, credibility has enabled the Fed to preempt inflation without precipitating recession and to counter the destabilizing effects of real shocks without arousing inflationary expectations. Always fragile, credibility is best ensured if written into law and rendered immune to the vagaries of changing leadership… CONTINUE READING