Mishkin: Fed Needs to Keep Its Eye on Inflation

The transcript features a discussion with a Columbia University professor on the Federal Reserve's recent decision, emphasizing a shift towards data dependency rather than calendar-based guidance. The conversation highlights the importance of inflation expectations and the challenges faced by central banks in achieving a 2% inflation target. It also touches on the constraints of fiscal policy, the need for infrastructure investment, and the lack of long-term fiscal planning. The professor suggests that the Fed should improve its communication strategy to better guide market expectations.

What is the main focus of the Fed's new approach as discussed by the professor?

• Calendar-based guidance

• Reducing inflation expectations

• Data-dependent decision-making

• Increasing interest rates

What is a key challenge for central banks worldwide according to the professor?

• Lowering interest rates

• Achieving a 2% inflation target

• Reducing unemployment rates

• Increasing GDP growth

According to Mickey Levy, what is primarily affecting the economy's growth?

• High inflation rates

• Non-monetary factors

• The Fed's monetary policy

• Strong fiscal policies

What does the professor suggest about fiscal policy?

• It should be less expansionary

• It should focus solely on reducing debt

• It should be more expansionary in the short term

• It should ignore long-term considerations

What does the professor think about the current state of fiscal policy?

• It is well-balanced

• It lacks long-term planning

• It is overly expansionary

• It is too restrictive

What does the professor believe the Fed should improve in its communication?

• The length of its policy statements

• The clarity of its forward guidance

• The frequency of its meetings

• The transparency of its interest rate decisions

How does the professor view the public's inflation expectations?

• They are biased upwards

• They are accurate

• They are too low

• They are irrelevant