What Monetary Policy Can and Cannot Do
One of the peculiar aspects of my return to the monetary policymaking arena has been the media’s interest in labeling me a “hawk” or “dove,” or someone who is anti-inflation or pro-growth. I regularly receive calls from reporters when economic statistics are released asking about my reactions to the numbers so that they can speculate on how I might vote at the next Federal Open Market Committee meeting. “Fedwatchers” — a fraternity I once belonged to — other market participants, and the media have increasingly focused on interpreting policymakers’ actions and on the minutiae of implementing policy. This focus has contributed to confusion about what monetary policy can and cannot do and has added to the age-old confusion between money and credit.
The views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. The series editor is Tasia Hane. This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. This paper and its data are subject to revision; please visit clevelandfed.org for updates.