How the Fed should think about its goals

In coming months, a debate will begin on how the Fed should approach its monetary policy. Its every-five-years "framework review" is on track to begin in 2024 and conclude in 2025.

Driving the news: But in Boston Friday, there was some early discussion of what it should entail, as a former top official argued that the last version of the framework, released in 2020, may have contributed to the outburst of inflation in 2021.

What they're saying: Don Kohn, former vice chair of the central bank, emphasized that the 2020 framework wasn't the main reason for inflation: "For crying out loud, it was the COVID distortion, supply and demand, etc.," he said.

• But he does say that it made "the inflation a bit higher and more persistent than otherwise" would have been the case. "That has its costs," he said.
• He pointed to "several asymmetries" in the 2020 framework in which policy reacted to employment below the perceived maximum, but not above.

The intrigue: "I think when the committee goes back to review… its framework, a framework should produce acceptable results for the dual mandate under a wide variety of circumstances," said Kohn, an influential voice among global central bankers.

Of note: When reporters asked Boston Fed president Susan Collins about the framework review Friday evening, she said: "I think it's important to emphasize that over the medium to longer run, and that two parts of our dual mandate are really complementary, and they're intertwined."