Abstract: This paper examines the recent deviation from rules-based monetary policy in the United States, and proposes a way for the Federal Reserve to return quickly to a more effective rules-based policy. The paper reviews the impact of the COVID pandemic on the economy, and the key monetary policy developments that led to an increase in inflation and today’s precarious economic situation. This review sets the stage and suggests a way for the Federal Reserve to improve economic performance and achieve low inflation by getting back to more rules-based policy decisions.
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