I want to thank the organizers for inviting me to speak here today. The discussion has focused on the following question: "How did the Fed get so far behind the curve?" My response is to relate how my view of the economy changed over the course of 2021 and how that evolving view shaped my policy position. When thinking about this question, there are three points that need to be considered. First, the Fed was not alone in underestimating the strength of inflation that revealed itself in late 2021. Second, to determine whether the Fed was behind the curve, one must take a position on the evolving health of the labor market during 2021. Finally, setting policy in real time can create what appear to be policy errors after the fact due to data revisions.
Reflections on Evolving Views
Let me start by reminding everyone of two immutable facts about setting monetary policy in the United States. First, we have a dual mandate from the Congress: maximum employment and price stability. Whether you believe this is the appropriate mandate or not, it is the law of the land, and it is our job to pursue both objectives. Second, policy is set by a large committee of up to 12 voting members and a total of 19 participants in our discussions. This structure brings a wide range of views to the table and a diverse set of opinions on how to interpret incoming economic data and how best to respond. We need to reconcile those views and reach a consensus that we believe will move the economy toward our mandate. This process may lead to more gradual changes in policy as members have to compromise in order to reach a consensus.
Back in September and December 2020, respectively, the Federal Open Market Committee (FOMC) laid out guidance for raising the federal funds rate off the zero lower bound and for tapering asset purchases. We said that we would "aim to achieve inflation moderately above 2 percent for some time" to ensure that it averages 2 percent over time and that inflation expectations stay anchored. We also said that the Fed would keep buying $120 billion per month in securities until "substantial further progress" was made toward our dual-mandate objectives. It is important to stress that views varied among FOMC participants on what was "some time" and "substantial further progress." The metrics for achieving these outcomes also varied across participants.
There was a range of views on the Committee. Eleven of my colleagues did not have a rate hike penciled in until after 2023. With regard to future inflation, 13 participants projected inflation in 2022 would be at or below our 2 percent target. In the March 2021 SEP, no Committee member expected inflation to be over 3 percent for 2021. As I argued in a speech last December, this view was consistent with private-sector economic forecasts.2
Second, as I mentioned, you cannot answer this question without taking a stand on the employment leg of our mandate. There was a clear difference in views on this and on what indicators should be looked at to determine whether we had met the 'substantial further progress" criteria we laid out in our December 2020 guidance. Some of us concluded the labor market was healing fast and we pushed for earlier and faster withdrawal of accommodation. For others, data suggested the labor market was not healing that fast and it was not optimal to withdraw policy accommodation soon. Many of our critics tend to focus only on the inflation aspect of our mandate and ignore the employment leg of our mandate. But we cannot. So, what may appear as a policy error to some was viewed as appropriate policy by others based on their views regarding the health of the labor market.
Finally, if one believes we were behind the curve in 2021, how far behind were we? In a world of forward guidance, one simply cannot look at the policy rate to judge the stance of policy. Even though we did not actually move the policy rate in 2021, we used forward guidance to start raising market rates starting with the September 2021 statement, which indicated tapering was coming soon. The 2-year Treasury yield, which I view as a good market indicator of our policy stance, went from approximately 25 basis points in late September 2021 to 75 basis points by late December. That is the equivalent, in my mind, of two 25 basis point policy rate hikes for impacting the financial markets. When looked at this way, how far behind the curve could we have possibly been if, using forward guidance, one views rate hikes effectively beginning in September 2021?
When he drafted his will at age 67, George Washington included a provision that would free the 123 enslaved people he owned outright. This bold decision marked the culmination of two decades of introspection and inner conflict for Washington, as his views on slavery changed gradually but dramatically.
"I wish to get quit of negroes."-George Washington, 1778George Washington first stated concerns about slavery in economic terms. Later, he added moral objections. Although Washington never identified his influences, many factors likely shaped his increasingly negative views of slavery.
But when we allow the Bible to lead us in our thinking on inspiration, we are compelled to leave room for the ancient writers to reflect and even incorporate their ancient, mistaken cosmologies into their scriptural reflections. (p. 95)
Archivos de Bronconeumologia is a scientific journal that preferentially publishes prospective original research articles whose content is based upon results dealing with several aspects of respiratory diseases such as epidemiology, pathophysiology, clinics, surgery, and basic investigation. Other types of articles such as reviews, editorials, a few special articles of interest to the society and the editorial board, scientific letters, letters to the Editor, and clinical images are also published in the Journal. It is a monthly Journal that publishes a total of 12 issues and a few supplements, which contain articles belonging to the different sections.All the manuscripts received in the Journal are evaluated by the Editors and sent to expert peer-review while handled by the Editor and/or an Associate Editor from the team. The Journal is published monthly in English. Manuscripts will be submitted electronically using the following web site: , link which is also accessible through the main web page of Archivos de Bronconeumologia.Access to any published article, is possible through the Journal's web page as well as from PubMed, Science Direct, and other international databases. Furthermore, the Journal is also present in Twitter and Facebook. The Journal expresses the voice of the Spanish Respiratory Society of Pulmonology and Thoracic Surgery (SEPAR) as well as that of other scientific societies such as the Latin American Thoracic Society (ALAT) and the Iberian American Association of Thoracic Surgery (AICT).Authors are also welcome to submit their articles to the Journal's open access companion title, Open Respiratory Archives.
A narrative review was conducted and designed to present a broad perspective on the Irish MTP and to describe its history and development in terms of clinical care, stakeholder views and changing trends.
Three themes emerged from the analysis; The History of the Methadone Treatment Protocol, Service User and Provider Views and Challenges and Developments. Despite the initial concern about methadone maintenance treatment (MMT) in Ireland, increased participation by Irish GPs in the treatment of opioid dependence is observed over the last two decades. There are now over 10,000 people on methadone treatment in Ireland, with 40% treated in general practice. The MTP provides structure, remuneration and guidance to GPs and is underpinned by training, ongoing education and a system of quality assurance provided by the Irish College of General Practice (ICGP). Challenges include the negative views of patients around how methadone services are delivered, the stigma associated with methadone treatment, the lack of choice around substitution medication, waiting lists for treatment in certain areas and rates of fatal overdose.
A narrative review was conducted and designed to present a broad perspective on the Irish MTP, and describe its history and development in terms of clinical care, stakeholder views and changing trends. A comprehensive search was conducted on the National Documentation Centre for Drugs, Health Research Board database, with no restriction on date range or types of records. Key search terms used were methadone treatment, general practice, opioid dependence and harm reduction combined with Ireland. Databases searched included PubMed, Science Direct, EMBASE, PsycINFO, Cochrane library and Medline. No limits were placed on dates. Follow-up search strategies included hand searching relevant national websites including the Health Service Executive (HSE), Irish Prison Service (IPS), Departments of Health and Justice (DOH and DJ), the Irish Penal Reform Trust (IPRT), Health Surveillance Protection Centre (HSPC) and EMCDDA. A hand search of reference lists from published peer-reviewed studies was also undertaken. References were managed by the citation manager Endnote. National experts and authors of existing papers were contacted to identify possible sources of unpublished and grey literature. The research team reviewed the relevant literature and agreed on the structuring of the review under the following three themes: The History of the Methadone Treatment Protocol, Service User and Provider Views, and Challenges and Developments.
Reviews of the MTP were conducted internally in 2005 by the Methadone Prescribing Implementation Committee itself and externally in 2010 [25]. The 2010 review was an external review of the MTP undertaken to inform and maximise treatment provision and assess clinical governance and audit, referral pathways, doctor enrolment, training (Levels 1 and 2) and GP coordination [25]. The review commented on improved prescribing and quality of independent practitioner practice and advised the need to maximise treatment provision and referral pathways. It also commented on a number of other issues, timely responses to requests for detoxification to be reviewed as part of a service audit process (see National Drugs Rehabilitation Framework Working Group on Drugs Rehabilitation) [26], rural service development, improved integration between and among services, improved clinical governance and audit, a need to review benzodiazepine prescribing (see Report of the Benzodiazepine Committee Department of Health and Children 2002) [27], changing urine analysis regimes, prescribing of methadone in police stations and the expansion of the number of Level 2 doctors with greater emphasis on transfer of patients from Level 2 to Level 1 doctors. Farrell and Barry [25] also commented on the inclusion of buprenorphine and naloxone treatment modalities and the need to revise the title to The Opioid Treatment Protocol, see Table 1 and Fig. 2. 2ff7e9595c
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