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SF Fed Research: Conflicting Signals Coming From Policy Rules
Using different rules to determine the optimal Fed policy rate gives central bankers "conflicting signals," new research from the San Francisco Federal Reserve Bank, and using the traditional Taylor rule can prove difficult in real time. "Determining whether the economy is overheating or underperforming is critical for monetary policy," San Francisco Fed Research Associates Early Elias and Helen Irvin write in the bank's Economic Letter published Monday, along with the bank's Senior Research Advisor Oscar Jorda. "Policymakers cannot simply rely on one indicator to make this judgment," the Economic Letter said. "Our ... (full story)