The FOMC's Use of Operational Targets: 85 Years and Counting

Jeff W. Huther, Kevin F. Kiernan, Elizabeth Klee and Ethan Rodriguez-Shah

No 2023-039, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: This paper uses summaries of the Federal Open Market Committee’s (FOMC’s) meetings to identify its operational targets and map those to operating regimes. We find that operational targets were more often discussed in the earlier part of the FOMC’s 85-year history, but recent years have seen a resurgence in discussions. We identify distinct operating regimes and find that regimes with discussions of multiple targets, usually rate and quantity pairs, are more common than regimes dominated by discussions of single targets. We document that the current period (the 2007-2009 financial crisis to today) is a notable break in operational targets from earlier periods. We also show that shifts in operational targets occur during recoveries, or after a significant downturn in the macroeconomy.

Pages: 27 pages
Date: 2023-05-14
New Economics Papers: this item is included in nep-ger, nep-his and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:96641

DOI: 10.17016/FEDS.2023.039

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