The challenge of normalizing policy will be to undo bad habits that have developed in how monetary policy is explained and understood. ... To re-establish a shared understanding, we will need to reassess both the imperatives that justified the extraordinary actions and the imperatives about monetary policy that were claimed. This will require candidly acknowledging the uncertainty associated with the transmission mechanism and the challenge of decision-making in conditions of uncertainty. ... It appears to me that the Fed and other central banks have avoided being candid about the uncertainty in order to maintain their credibility. I think this is backwards. Central banks cannot and will not regain their credibility unless they are candid about the uncertainty and how they confront that uncertainty.
- Also: Financial Times - US Treasuries: On the cusp of a reversal < 5min
- Also: FiveThirtyEight - The Fed’s Favorite Inflation Predictors Aren’t Very Predictive < 5min
- Also: Absolute Return Partners - A Note on Inflation: Is it here or isn’t it? 5-15min
- Also: Janus - Show Me The Money < 5min
- Also: Financial Times - Three ways the economic and financial cycle could end < 5min