Fed’s Brainard calls for major framework overhaul
Yield curve caps, flexible inflation targeting and more active macro-prudential policy could help, governor says
Lael Brainard, a governor of the Federal Reserve, made the case for a significant overhaul of the central bank’s monetary and financial stability policy frameworks in a speech on November 26.
The Fed should consider a suite of changes including a flexible inflation target, more active use of macro-prudential tools and medium-term yield caps, Brainard said.
The new approach would reduce the reliance on large and “lumpy” quantitative easing policies, she said. Furthermore, it could be used
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