Fed's Quarles: 'I'm One of the Optimists'

The speaker, an optimist on the committee, discusses the evolution of the economy and the importance of adapting monetary policy frameworks. They compare old and new frameworks, emphasizing the need to wait for actual economic outcomes before acting. The speaker praises Janet Yellen's approach to unemployment and interest rates, highlighting the benefits to the labor market. They support the new outcome-based framework, which allows for inflation above the 2% target without strict mathematical equivalency, aiming for superior economic outcomes.

What is the main difference between the old and new economic frameworks discussed by the speaker?

• The old framework focuses on immediate action based on projections, while the new framework waits for actual outcomes.

• The old framework emphasizes inflation control, while the new framework focuses on unemployment.

• The old framework is more optimistic, while the new framework is more pessimistic.

• The old framework relies on mathematical models, while the new framework uses qualitative analysis.

According to the speaker, what was a major achievement during Janet Yellen's tenure as chair of the Fed?

• Allowing the unemployment rate to fall while gradually raising interest rates.

• Focusing solely on the stock market performance.

• Rapidly increasing interest rates to control inflation.

• Implementing a strict mathematical equivalency for inflation targeting.

How does the speaker view the relationship between unemployment and inflation in the context of the new framework?

• Higher inflation is always a result of lower unemployment.

• Unemployment has no impact on inflation.

• Unemployment and inflation are directly correlated.

• Lower unemployment does not necessarily lead to higher inflation.

What does the speaker believe about the committee's stance on inflation under the new framework?

• The committee will not tolerate any inflation above 2%.

• The committee is comfortable with inflation slightly above 2%.

• The committee will strictly maintain a 2% inflation target.

• The committee will ignore inflation rates entirely.

What is the speaker's opinion on mathematical equivalency in inflation targeting?

• It is the only way to ensure fair economic outcomes.

• It should be strictly followed for accurate projections.

• It is essential for maintaining economic stability.

• It is not necessary for effective inflation management.