philip n jefferson : on the assessment of current monetary policy speech by mr philip n jefferson, member of the board of governors of the federal reserve system, at the " how to get back on track - a policy conference ", hoover institution, stanford, california, 12 may 2023. * * * accompanying charts of the speech good afternoon, everyone. thank you to the organizers for inviting me to speak. it is a pleasure to be here. i welcome hearing diverse views on how to best conduct monetary policy, and this conference is certainly providing an invigorating debate on that topic. before i begin, i want to address quickly some news from this morning. i am deeply honored by the trust president biden and vice president harris have shown me with the nomination to be the next vice chair of the board. i am humbled by this extraordinary opportunity and thankful to my colleagues, friends, and family for their support. turning back to the conference, as i join this debate, let me remind you that the views i will express today are my own and are not necessarily those of my colleagues in the federal reserve system. introduction the title of the conference " how to get back on track : a policy conference " is potent. its intent and ambiguity are striking. first, the title presupposes that u. s. monetary policy is currently on the wrong track. second, the webpage for this conference advances a puzzling definition of the phrase " on track. " how so? according to the hoover webpage, " a key goal of the conference is to examine how to get back on track and, thereby, how to reduce the inflation rate without slowing down economic growth " ( emphasis added ). 1 as this audience knows, there are macroeconomic models that permit disinflation with no slowdown in economic growth, but the assumptions underlying these models are very strong. 2 it's not clear, at least to me, why such a strict metric would be used to assess real - world monetary policymaking. third, the definition of " on track " in the title contrasts with more commonplace definitions such as " achieving or doing what is necessary or expected, " as offered by a standard reference such as the merriam - webster dictionary. 3 my view is that this commonplace definition provides a more practical lens through which to assess real - world policymaking. against this semantic backdrop, i will begin my remarks with my perspective on the current inflation and economic situation. then, i will

500 basis points of tightening of the policy rate, the national unemployment rate stands at a nearrecord low of 3. 4 percent. at its recent peak, total pce inflation was 7 percent in june 2022. currently, it is 4. 2 percent in march 2023. is inflation still too high? yes. has the current disinflation been uneven and slower than any of us would like? yes. but my reading of this evidence is that we are " doing what is necessary or expected " of us. furthermore, monetary policy affects the economy and inflation with long and varied lags, and the full effects of our rapid tightening are still likely ahead of us. we are balancing the directives of the dual mandate given to us by the u. s. congress. this is not an easy task in these uncertain times, but i can assure you that i and my colleagues on the fomc take it quite seriously and with great humility. it is in this sense that i believe that we are well " on track. " thank you. references croushore, dean ( 1992 ). " what are the costs of disinflation? " ( pdf ) federal reserve bank of philadelphia, business review, may / june, pp. 3 – 15. goodfriend, marvin, and robert g. king ( 2005 ). " the incredible volcker disinflation, " journal of monetary economics, vol. 52 ( july ), pp. 981 – 1015. sargent, thomas j. ( 1982 ). " stopping moderate inflations : the methods of poincare and thatcher, " in rudiger dornbusch and mario henrique simonsen ( eds. ), inflation, debt, and indexation ( cambridge, mass. : mit press ), pp. 54 – 96. tetlow, robert j. ( 2022 ). " how large is the output cost of disinflation? " finance and economics discussion series 2022 - 079 ( washington : board of governors of the federal reserve system, november ). 1 see the conference's webpage at www. hoover. org / events / how - get - back - track - policy - conference. 2 estimates of the cost of disinflation depend on the model used to measure it. classical models, in which rational expectations play a dominant role in determining the 4 / 5 bis - central bankers'speeches cost of disinfl