A brief note on the Fed’s monetary policy

Editor's note: In light of the battle to succeed Ben Bernanke as Fed Chair, we have decided to make this subscriber post available outside the paywall.
I mentioned Fed Vice Chair Janet Yellen's speech in the last post. I tend to like the way she phrases things because her statements are the clearest of all of the major FOMC policy makers. This speech is in that vein. If I could summarize her speech, I would say: "The Fed will focus on employment over inflation as far as its dual mandate is concerned until inflation is over 2.5% or unemployment is below 6.5%."
Now, there was a lot to unpack in her speech about risks to easy money and about how the Fed decides whether the employment market is sluggish. But the bottom line here is that she is fully behind the agreed upon targets that the Fe...

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