Calibrating Monetary Policy

Régis Barnichon and Aayush Singh

FRBSF Economic Letter, 2026, vol. 2026, issue 17, 5

Abstract: The new SF Fed Policy Calibration Tool is designed to help construct a monetary policy path that aligns with one’s views of the economy and policy objectives. Applying the tool to recent tariff increases shows that preferred policy paths vary depending on one’s assessment of the economic effects of tariffs. If tariffs predominantly affect demand, more policy accommodation may be warranted; if they predominantly affect supply, less accommodation may be appropriate. The high uncertainty surrounding these effects implies a wide range of possible scenarios for the best course of action.

Keywords: monetary policy; tariffs (search for similar items in EconPapers)
Date: 2026
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