We can debate whether the Fed has the right target or not; that’s an open and interesting question on which there are plenty of views worth considering. Do you know what’s not up for debate? Whether what we have experienced in America over the last few years represents good monetary policy making. It doesn’t. Setting a public target, consistently missing that target, projecting that the target will be consistently missed in future, and conducting policy so as to make sure the target is in fact missed: that is lousy monetary policy making. And I cannot understand why the Fed does not see this record as detrimental to the recovery and highly corrosive of the Fed’s credibility.
The Fed needs a change in behaviour, a change in target, or a change in personnel.
Note: Moving away from target!
In fact, they are pretty happy, as conveyed by SF Fed president John Williams:
I’ll be honest: These speeches get more and more enjoyable as time goes bybecause the economic outlook keeps getting better and better. Instead of gloom and doom with a scattering of hopeful notes, things are now pretty upbeat, with only a couple of standard economist’s caveats thrown in.