By recognising the limits of using an activist monetary policy in a world characterised by uncertainty and changing parameter values, monetary authorities focused their attention on what they could deliver — price stability over the medium term. Crucially, that environment gave monetary policy a new credibility and created a regime of low inflation expectations.
Hearing a broad range of perspectives on these issues will help us make good decisions as we consider new approaches to monetary policy. As I mentioned before, this afternoon’s discussion is the last in a series of Fed Listens events that we began back in February.