Is it one year or several years? Investment in creative workforce can shape new economic frontiers. Some argue that a rules-based policy is not enough anymore and that we need more international coordination. Is it one year or several years? It is promising that the ECB and other central banks often use the word “strategy” when describing their own monetary-policy reviews. The Taylor rule is one kind of targeting monetary policy used by central banks.The Taylor rule was proposed by the American economist John B. Taylor, economic adviser in the presidential administrations of Gerald Ford and George H. W. Bush, in 1992 as a central bank technique to stabilize economic activity by setting an interest rate.. A strategic approach is necessarily a rules-based approach, which is precisely how the international monetary system should be run. STANFORD – Many of the world’s central banks have been formally reviewing their monetary-policy strategies in light of COVID-19 and the experience leading up to the pandemic. Nov 27 2020 09:08 PM . In addition to introducing a massive policy response to the COVID-19 crisis, the US Federal Reserve this year has announced a fundamental change in its overall strategy. no longer includes material on monetary-policy rules, whereas the previous six reports going had featured a whole section in which different rules were presented and compared with actual scenarios. John B. Taylor, Under Secretary of the US Treasury from 2001 to 2005, is Professor of Economics at Stanford University and a senior fellow at the Hoover Institution. Is it one year or several years? Moreover, the formal policy rules previously listed in the Monetary Policy Report all have variables to account for factors other than the inflation rate, such as the unemployment rate or the gap between real and potential GDP. A strategic approach is necessarily a rules-based approach, which is precisely how the international monetary system should be run. What is the Taylor rule recommendation for the federal funds rate target? In early September, Robert Heller, a former Federal Reserve governor, argued in a. that the Fed should “not target an average inflation rate of 2%.” Then, at a virtual conference convened by Stanford University’s Hoover Institution this month, Charles I. Plosser, a former president of the Federal Reserve Bank of Philadelphia, and Mickey D. Levy of Berenberg Capital Markets. Supporters of rules argue that discretionary monetary policy falls prey to information and incentive problems. In fact, strategic responses of rational, utility-maximising agents lead to an ex-post sub-optimal arrangement; rules ensure that – ex-po… See solution. As of this summer, its. Moreover, the formal policy rules previously listed in the Monetary Policy Report all have variables to account for factors other than the inflation rate, such as the unemployment rate or the gap between real and potential GDP. Powell himself acknowledged this lack of specificity at the Jackson Hole conference in August. What is the monetary policy prescription of the market monetarists? How does rule-based monetary policy differ from discretionary monetary policy (that is, monetary policy not based on a rule)? © 2020 Business 24 - Online Newspaper From Ghana. Similarly, European Central Bank President Christine Lagarde recently told the annual ECB and Its Watchers XXI conference that the ECB is in the middle of its own “monetary policy strategy review.” And according to Bank of Japan Governor Haruhiko Kuroda, there are ongoing discussions with the new government of Prime Minister Yoshihide Suga about how to deal with the pandemic and whether a new monetary-policy strategy is in order. In light of these discussions, it previously looked like there was a move underway to reform the entire international monetary system, with each country or region following a strategy similar to the Fed, though attuned to its own circumstances. Proponents of discretionary monetary policy usually maintain that, with discretion, the monetary authority can do whatever one’s preferred rule prescribes or something better. Check out a sample textbook solution. Activists argue that flexibility is a desirable quality in monetary policy; inflexibility is not. In early September, Robert Heller, a former Federal Reserve governor, argued in a letter to the Wall Street Journal that the Fed should “not target an average inflation rate of 2%.” Then, at a virtual conference convened by Stanford University’s Hoover Institution this month, Charles I. Plosser, a former president of the Federal Reserve Bank of Philadelphia, and Mickey D. Levy of Berenberg Capital Markets criticized the Fed for not being specific about the timespan over which average inflation will be measured. Rules vs. discretion… In monetary policy, discretion is essential to offset output fluctuations in Keynesian frameworks. In monetary policy, discretion is essential to offset output fluctuations in Keynesian frameworks. Previous question Next question Get more help from Chegg. 1. wages and price are flexible enough that economy can self-regulate 2. activist monetary policy may not work if public correctly guesses what Fed will do and counteract The phrase “rules-based monetary policy” has frequented conservative circles a lot lately. A decade ago, I wrote a paper with John C. Williams, now the president of the Federal Reserve Bank of New York, titled “Simple and Robust Rules for Monetary Policy,” in which we emphasized the importance of rules-based policymaking. Key Takeaways Key Points. A rule-based policy can be more credible because it is more transparent and easier to anticipate, unlike discretionary policy. A strict rules-based approach does not allow for flexibility and as a result may limit choices or be inapplicable in certain circumstances, creating a need for a compromise between discretionary and rules-based policy. They buy and sell government bonds and other securities from member banks. The time-(in)consistency literature, launched bu Kydland and Prescott (1977), shows that discretion-based solutions would be the first-best in terms of agents’ utility, but they are not time-consistent. Moreover, there is no mention of how monetary policy will be used to generate higher inflation to make up for periods when inflation is less than 2%. Oct 16, 2020 John B. Taylor In addition to introducing a massive policy response to the COVID-19 crisis, the US Federal Reserve this year has announced a fundamental change in its overall strategy. What are some of the arguments for each? Similarly, European Central Bank President Christine Lagarde recently told the annual ECB and Its Watchers XXI conference that the ECB is in the middle of its own “monetary policy strategy review.” And according to Bank of Japan Governor Haruhiko Kuroda, there are ongoing discussions with the new government of Prime Minister Yoshihide Suga about how to deal with the pandemic and whether a new monetary-policy strategy is in order. Strict adherence to a rule would prevent the monetary authority from taking some courses of action. A discretionary policy allows policymakers to respond quickly to events. Quickly uncover hidden opportunities with comprehensive data and content. The Central Bank of Yemen's (CBY) approach has been based on discretionary targeting of broad money without any clear target to anchor inflation expectations. It is promising that the ECB and other central banks often use the word “strategy” when describing their own monetary-policy reviews. First, the Fed is run by fallible humans. First of all, if you have policy rule, like a Taylor rule, you have a strategy, which is sort of what it amounts to. It is promising that the ECB and other central banks often use the word “strategy” when describing their own monetary-policy reviews. Bond interest deferment proposal still being considered—BoG Gov. Money › Banking Monetary Policy Rules, Interest Rates, and Taylor's Rule. Monetary policy in Yemen is largely rudimentary and ad hoc in nature. Check out a sample Q&A here. In adopting this “flexible” approach, the Fed seems to have shifted away from the more strategic, rules-based policy that it had been pursuing at least since 2017. check_circle Expert Answer. This paper argues in favor of a new formal monetary policy framework for Yemen emphasizing a proactive and rule-based approach with a greater direct focus on … Are the cracks between the BRICS beginning to show? Why so many rules? He is the author of. How does rule-based monetary policy differ from discretionary monetary policy (that is, monetary policy not based on a rule)? Otmar Issing, a former chief economist and member of the ECB Board who was largely responsible for charting the original course of ECB policymaking, “other central banks should not blindly follow the Fed’s new strategy.”, Issing is not alone in seeing problems with the Fed’s new approach. But it no longer looks that way. In contrast, here is what Summers said at the Stanford debate (based on a video recording): Supporters of discretion argue that strict rules-based policy cannot account for real-world complexities, such as financial innovation, that can make a previously sound rule unsound. Chapter 28, Problem 35CTQ. The monetary policy of the Federal Reserve has involved varying degrees of rule- and discretionary-based modes of operation over time. Copyright © 2020 Zawya. This paper argues in favor of a new formal monetary policy framework for Yemen emphasizing a proactive and rule-based approach with a greater direct focus on … “At the very least,” argues Otmar Issing, a former chief economist and member of the ECB Board who was largely responsible for charting the original course of ECB policymaking, “other central banks should not blindly follow the Fed’s new strategy.”. Issing is not alone in seeing problems with the Fed’s new approach. 3. activist monetary policy is flexible, rules-based monetary policy is not. We also support the Government’s other economic aims for growth and employment. A decade ago, I wrote a paper with John C. Williams, now the president of the Federal Reserve Bank of New York, titled “Simple and Robust Rules for Monetary Policy,” in which we emphasized the importance of rules-based policymaking. Learn more about the various types of monetary policy around the world in this article. with John C. Williams, now the president of the Federal Reserve Bank of New York, titled “Simple and Robust Rules for Monetary Policy,” in which we emphasized the importance of rules-based policymaking. In light of these discussions, it previously looked like there was a move underway to reform the entire international monetary system, with each country or region following a strategy similar to the Fed, though attuned to its own circumstances. Learn more about the various types of monetary policy around the world in this article. But, unlike the vague definition that the Fed has now adopted, I explicitly defined the “average” as “the rate of inflation over the previous four quarters.” In other words, the Fed could still switch to an average-inflation approach and yet be far more specific than it has decided to be. A strategic approach is necessarily a rules-based approach, which is precisely how the international monetary system should be run. And, to some extent, they are right. Monetary policy is formulated based on inputs gathered from a variety of sources. Would a rules-based monetary policy produce price stability? It is understandable that Issing and others would be reluctant to go along with the Fed’s less strategic, discretionary approach, especially when there are alternatives that other central banks can pursue. The debate over “rules vs. discretion” was a centerpiece of disputes over monetary policy during the 1960s-1980s. This website uses cookies to improve your online experience. And there are reams of additional studies showing the benefits of rules-based monetary policy. Similarly, European Central Bank President, the annual ECB and Its Watchers XXI conference that the ECB is in the middle of its own “monetary policy strategy review.” And according to Bank of Japan Governor. A decade ago, I wrote a paper with John C. Williams, now the president of the Federal Reserve Bank of New York, titled “Simple and Robust Rules for Monetary Policy,” in which we emphasized the importance of rules-based policymaking. Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes! And there are reams of additional studies showing the benefits of rules-based monetary policy. Is the Fed considering additional changes in its procedures beyond the current mix of near-zero interest rates and large-scale asset purchases? A rule based monetary policy envisions that monetary authority should increase money supply according to some fixed rule which should be conveyed to people before hand so that problems do not rise due view the full answer. All central banks have three tools of monetary policy in common. Inflation Targeting (Rule) A monetary policy strategy in which the central bank makes a public commitment to achieving an explicit inflation target and to explaining how its policy actions will achieve that target (Friedman's) k-percent rule. Rules as a strategy and insurance against excessive intervention. Implicitly, activists maintain that the more closely monetary policy can be designed to meet the particulars of a given economic environment, the better. Hong Kong strife highlights uneasy corporate truce, COVID-19: We mustn’t let this crisis go to waste, Trump or Biden, new U.S. president faces troubled economy, Six key credit themes for global asset management sector in 2021, Wednesday Outlook: Dollar hovers near 2-1/2 year low; gold prices dip, Review: In November, GCC equity markets hit highest level since February 2020, Egypt's startups that got the highest funding in November, Tuesday Outlook: Gold rebounds from 5-month lows, Asian shares rise, Coronavirus vaccines will be optional, free to all in Kuwait - PM, BioNTech-Pfizer vaccine will be sent by plane or ferry to UK - exec, EU extends relief measures for COVID-hit loans to March, UK approval of COVID-19 vaccine won’t affect Germany’s doses - ministry, BioNTech-Pfizer testing if vaccine prevents COVID-19; defends UK regulatory process. Who’s Afraid of Rules-Based Monetary Policy? 3. activist monetary policy is flexible, rules-based monetary policy is not. Monetary policy in Yemen is largely rudimentary and ad hoc in nature. Supporters of rules argue that discretionary monetary policy falls prey to information and incentive problems. Low and stable inflation is good for the UK’s economy and it is our main monetary policy aim. See Answer. In monetary policy, the debate between advocates of rules and advocates of discretion rages on. Adopting a rules‐ based approach to the conduct of monetary policy would help safeguard central bank independence and promote both monetary and financial stability. As of this summer, its Monetary Policy Report no longer includes material on monetary-policy rules, whereas the previous six reports going had featured a whole section in which different rules were presented and compared with actual scenarios. Milton Friedman was in favor of rules and he liked John׳s rule. As Don put it in a 2007 speech at the Dallas Fed, he and I “have spent countless hours discussing how the Federal Reserve arrives at decisions about monetary policy and how it should arrive at decisions. One of the first to complete this process was the US Federal Reserve System, which decided to move to a new “flexible form of average inflation targeting,” as Fed Chair Jerome Powell described it in a speech at the annual Jackson Hole monetary-policy conference in August. Monetary policy is the guide that central banks use to manage money, credit, and interest rates in the economy to achieve its economic goals. Recognizing the potential drawbacks of purely discretionary policy, the Federal Reserve frequently has sought to exploit past patterns and regularities to operate in a systematic way. A rule-based policy can be more credible because it is more transparent and easier to anticipate, unlike discretionary policy. Conversely, monetarists propose a tight, fixed rule to ensure price stability. Rules are binding. Activist monetary policy is flexible; non-activist (rules-based) monetary policy is not. A discretionary policy allows policymakers to respond quickly to events. Screen, analyze and compare projects in the Middle East and North Africa across Infrastructure, Real Estate, Industrial and Energy sectors with Refinitiv’s Eikon. Developing such an approach would not be difficult for the Fed to do, especially if other central banks also chose to go in this direction. All Rights Reserved. That is why so many distinguished monetary scholars have endorsed this approach. Noting that “we are not tying ourselves to a particular mathematical formula that defines the average,” he added that, “Our decisions about appropriate monetary policy … will not be dictated by any formula.”. the Fed for not being specific about the timespan over which average inflation will be measured. The Central Bank of Yemen's (CBY) approach has been based on discretionary targeting of broad money without any clear target to anchor inflation expectations. And there are reams of additional studies showing the benefits of rules-based monetary policy. Many of the world’s central banks have been formally reviewing their monetary-policy strategies in light of COVID-19 and the experience leading up to the pandemic. Then, in a press release the same day, the Fed’s Board of Governors explained that policy decisions would be based on “assessments of the shortfalls of employment from its maximum level” rather than by “deviations from its maximum level,” as had been previously stated. Examining a variety of rules is helpful because there is no agreement on a single “best” rule, and different rules can sometimes generate very different values for the federal funds rate, both for the present and for the future. Some macroeconomists thus have argued in recent years that monetary policy should be ‘rule-based’ rather than discretionary, that is, Central Bankers strictly would have to follow some kind of monetary policy rule without the authority to deviate from it. As of this summer, its Monetary Policy Report no longer includes material on monetary-policy rules, whereas the previous six reports going had featured a whole section in which different rules were presented and compared with actual scenarios. In adopting this “flexible” approach, the Fed seems to have shifted away from the more strategic, rules-based policy that it had been pursuing at least since 2017. The Federal Reserve Building is reflected on a car in Washington. Let me explain why I think it is important, based on my own experience, to have a rules-based monetary policy. This action changes the reserve amount the banks have on hand. This has at least two big advantages. In fact, this would be easier done than said. But it no longer looks that way. Access the most comprehensive database of companies and officers in the Middle East and North Africa, covering all major sectors and industries, from Refinitiv. Why so many rules? Among the rules considered were transparent settings for the Fed’s interest-rate policy, including the so-called Taylor rule, a price-level rule, and a modified Taylor rule to deal with the zero bound. effect of lags. Want to see the full answer? A rule based monetary policy envisions that monetary authority should increase money supply according to some fixed rule which should be conveyed to people before hand so that problems do not rise due view the full answer. Noting that “we are not tying ourselves to a particular mathematical formula that defines the average,” he added that, “Our decisions about appropriate monetary policy … will not be dictated by any formula.” Then, in a press release the same day, the Fed’s Board of Governors explained that policy decisions would be based on “assessments of the shortfalls of employment from its maximum level” rather than by “deviations from its maximum level,” as had been previously stated. Description: We show federal funds rates from 7 simple monetary policy rules based on 3 sets of forecasts for economic conditions. Among the rules considered were transparent settings for the Fed’s interest-rate policy, including the so-called Taylor rule, a price-level rule, and a modified Taylor rule to deal with the zero bound. Contrast discretionary and rules-based monetary policy. Monetary policy is formulated based on inputs gathered from a variety of sources. Rather than casting about for something new or simply different from the Fed, they can embark on the same rules-based-policy path that the Fed itself was on before the pandemic struck. He concludes that a rule-based approach is superior and … Solution.pdf Next Previous. Monetary policy in Yemen is largely rudimentary and ad hoc in nature. And there are reams of additional studies showing the benefits of rules-based monetary policy. John B. Taylor, Under Secretary of the US Treasury from 2001 to 2005, is Professor of Economics at Stanford University and a senior fellow at the Hoover Institution. Suppose the inflation rate is 4 percent and the GDP gap is 5 percent. A rule involves the exercise of control over the monetary authority in a way that restricts the monetary authority’s actions. For instance, the monetary authority may look at macroeconomic numbers … Monetary Policy Tools . These variables could be included in the current strategy without neglecting the inflation target, as could policy rules to deal with asset purchases and their eventual unwinding. the same day, the Fed’s Board of Governors explained that policy decisions would be based on “assessments of the, of employment from its maximum level” rather than by “. That is why so many distinguished monetary scholars have endorsed this approach. Check out a sample textbook solution. What are some of the arguments for each? Who’s Afraid of Rules-Based Monetary Policy? A strict rules-based approach does not allow for flexibility and as a result may limit choices or be inapplicable in certain circumstances, creating a need for a compromise between discretionary and rules-based policy. Developing such an approach would not be difficult for the Fed to do, especially if other central banks also chose to go in this direction. And there are reams of additional studies showing the benefits of rules-based monetary policy. Let me explain why I think it is important, based on my own experience, to have a rules-based monetary policy. I know that Don has thought deeply about rules-based monetary policy. We set monetary policy to achieve the Government’s target of keeping inflation at 2%. It is promising that the ECB and other central banks often use the word “strategy” when describing their own monetary-policy reviews. What is the monetary policy prescription of the market monetarists? Powell himself acknowledged this lack of specificity at the Jackson Hole conference in August. Would a rules-based monetary policy produce price stability? For the case of Pakistan, there is good number of studies available on money-inflation relationship but the number is limited in case of rule based monetary policy.Qayyum (2006) identifies significant role of money in explaining inflation variability. Rule-based systems for monetary policy have some clear advantages. One of the first to complete this process was the US Federal Reserve System, which decided to move to a new “flexible form of average inflation targeting,” as Fed Chair Jerome Powell described it in a. at the annual Jackson Hole monetary-policy conference in August. What are some of the arguments … For outright transactions, no restrictions are placed a priori on the range of counterparties. rules-based monetary policy. Rules as a strategy and insurance against excessive intervention. Activists argue that flexibility is a desirable quality in monetary policy; inflexibility is not. I believe the current spillovers are largely due to these policy deviations and to unconventional monetary policy. Oct 16, 2020 John B. Taylor. “At the very least,” argues Otmar Issing, a former chief economist and member of the ECB Board who was largely responsible for charting the original course of ECB policymaking, “other central banks should not blindly follow the Fed’s new strategy.”. First of all, if you have policy rule, like a Taylor rule, you have a strategy, which is sort of what it amounts to. Activist monetary policy is flexible; non-activist (rules-based) monetary policy is not. would have a discretionary monetary policy. Monetary policy is policy adopted by the monetary authority of a nation to control either the interest rate payable for very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money supply, often as an attempt to reduce inflation or the interest rate to ensure price stability and general trust of the value and stability of the nation's currency. Essentially, Friedman advocated setting the nominal interest rate at zero. How does rule-based monetary policy differ from discretionary monetary policy (that is, monetary policy not based on a rule)? One of the first to complete this process was the US Federal Reserve System, which decided to move to a new “flexible form of average inflation targeting,” as Fed Chair Jerome Powell described it in a speech at the annual Jackson Hole monetary-policy conference in August. Want to see the full answer? Conceptually, it is possible to have an organization responsible for conducting monetary policy that is unconstrained except by its judgment of how the economy could be improved through targeted monetary policy. Moreover, the formal policy rules previously listed in the. Key Points. It is understandable that Issing and others would be reluctant to go along with the Fed’s less strategic, discretionary approach, especially when there are alternatives that other central banks can pursue. Want to see this answer and more? Milton Friedman proposed constant money growth rule: the Central Bank would simply increase the monetary base by the same percentage increase year after year (let’s say 6%, for example). First, they all use open market operations. Rule-based systems for monetary policy have some clear advantages. But, unlike the vague definition that the Fed has now adopted, I explicitly defined the “average” as “the rate of inflation over the previous four quarters.” In other words, the Fed could still switch to an average-inflation approach and yet be far more specific than it has decided to be. A strategic approach is necessarily a rules-based approach, which is precisely how the international monetary system should be run. The debate over “rules vs. discretion” was a centerpiece of disputes over monetary policy during the 1960s-1980s. Latest Data; Background and Resources; Archives; Description: We show federal funds rates from 7 simple monetary policy rules based on 3 sets of forecasts for economic conditions. all have variables to account for factors other than the inflation rate, such as the unemployment rate or the gap between real and potential GDP. Conversely, monetarists propose a tight, fixed rule to ensure price stability. When I first developed the Taylor rule, which has been widely discussed for three decades now, I based it on an average inflation rate. Monetary policy, measures employed by governments to influence economic activity, specifically by manipulating the supplies of money and credit and by altering rates of interest. And there are reams of additional studies showing the benefits of rules-based monetary policy. Moreover, there is no mention of how monetary policy will be used to generate higher inflation to make up for periods when inflation is less than 2%. That is why so many distinguished monetary scholars have endorsed this approach. It is promising that the ECB and other central banks often use the word “strategy” when describing their own monetary-policy reviews. You can change your cookie settings through your browser. www.project-syndicate.org, Have news to share? What is the Taylor rule recommendation for the federal funds rate target? from its maximum level,” as had been previously stated. Only institutions subject to minimum reserves may have access to the standing facilities and participate in open market operations based on standard tenders. He is the author of Global Financial Warriors and (with George P. Shultz) Choose Economic Freedom. 1. Policy Rules and How Policymakers Use Them. The latest business news and analysis straight out of Ghana's capital. Fixed-Rule Policy: A fiscal or monetary policy designed to be an economic goal or target of a government. Previous question Next question Get more help from Chegg. Implicitly, activists maintain that the more closely monetary policy can be designed to meet the particulars of … Monetary policy, measures employed by governments to influence economic activity, specifically by manipulating the supplies of money and credit and by altering rates of interest. In the aftermath of almost a decade of unconventional monetary policy to fight the Great Recession, many political actors are contemplating new rules on monetary policy. For instance, the monetary authority may look at macroeconomic numbers … Under rational expectations rules (2) and (3) both implement the fully optimal equilibrium by improving the output/inflation trade-off. Chapter 28, Problem 37CTQ. Want to see the step-by-step answer? Email us at editorial.zawya@refinitiv.com, or send us your company press releases to pressrelease.zawya@refinitiv.com. case for nonactivist monetary policy. It is promising that the ECB and other central banks often use the word “strategy” when describing their own monetary-policy reviews. In fact, this would be easier done than said. Alternative policy rules While the Taylor rule is the best-known formula that prescribes how policymakers should set and adjust the short-term policy rate in response to the values of a few key economic variables, many alternatives have been proposed and analyzed.. The idea of ‘rule-based’ monetary policy is actually relatively old. … And there are reams of additional studies showing the benefits of rules-based monetary policy. check_circle Expert Solution. A strategic approach is necessarily a rules-based approach, which is precisely how the international monetary system should be run. The Friedman rule is a monetary policy rule proposed by Milton Friedman. He is the author of Global Financial Warriors and co-author (with George P. Schultz) of Choose Economic Freedom. arrow_back. But whether the focus is on “deviations” or “shortfalls,” this new approach adds unnecessary uncertainty, because shortfalls are not defined. We heard complaints about the spillovers during the stop-go monetary policy in the 1970s. But we have found that very often historical regularities have been … The Taylor rule is one kind of targeting monetary policy used by central banks.The Taylor rule was proposed by the American economist John B. Taylor, economic adviser in the presidential administrations of Gerald Ford and George H. W. Bush, in 1992 as a central bank technique to stabilize economic activity by setting an interest rate.. That is why so many distinguished monetary scholars have endorsed this approach. Related Questions. Issing is not alone in seeing problems with the Fed’s new approach. , there are ongoing discussions with the new government of Prime Minister Yoshihide Suga about how to deal with the pandemic and whether a new monetary-policy strategy is in order. Rules can directly limit the actions taken by a monetary authority. But whether the focus is on “deviations” or “shortfalls,” this new approach adds unnecessary uncertainty, because shortfalls are not defined. A higher reserve means banks can lend less. Is the Fed considering additional changes in its procedures beyond the current mix of near-zero interest rates and large-scale asset purchases? Republican presidential candidate Ted Cruz expressed his deep passion for implementing a monetary policy rule in a handful of presidential debates this year, including both October’s and November’s debates. MPC to fire next shots at coronavirus crisis, Banks tighten credit as COVID-19 rages—survey, Government settles prolonged inter utility legacy debt of US$203 million. Rather than casting about for something new or simply different from the Fed, they can embark on the same rules-based-policy path that the Fed itself was on before the pandemic struck. check_circle Expert Solution. A rule-based policy can be more credible because it is more transparent and easier to anticipate, unlike discretionary policy. A monetary policy that is based on an expert assessment of the current economic situation Inflation Targeting (Rule) A monetary policy strategy in which the central bank makes a public commitment to achieving an explicit inflation target and to explaining how its policy actions will achieve that target
2020 what is a rule based monetary policy