As the Data Change, So Should the Fed
A consistent monetary policy is one that adjusts to economic and financial conditions.
A shift in the wind.
Photograph: AFP contributor/Getty Images
Almost exactly nine months ago, Fed Governor Lael Brainard gave a speech titled “Navigating Monetary Policy as Headwinds Shift to Tailwinds.” Her gist was that the Federal Reserve needed to “be ready to adjust the path of policy” with the prevailing winds.
Now the winds are shifting again, perhaps sooner than she or her colleagues anticipated. Adjusting Fed policy in response — in particular, by ending or delaying its steady interest-rate increases — would be entirely consistent not only with Brainard’s speech but also with the data-dependent framework that Fed officials have repeatedly outlined over the past year.