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Powell or Brainard Will StruggleComplicating the decision-making and posing a challenge for communications is the much-hailed revamping of the central bank’s strategy in August and September 2020.
Chair Powell, Governor Brainard and colleagues agreed then it would “be appropriate” to keep borrowing costs ultra-low until maximum employment was reached, which they redefined as a “broad-based and inclusive goal.”
One problem: The Fed’s policy framework doesn’t address how officials should balance risks between inflation and employment, an omission drawing criticism from economists such as Harvard University’s Jason Furman, who led former President Barack Obama’s Council of Economic Advisers.