Fed's Bullard blogs about his dissent

Federal Reserve Bank of St. Louis President James Bullard wrote a blog post to explain why he dissented on the proposed amendments to the "Statement of Longer-Run Goals" at the FOMC's January 2016 meeting. The Federal Open Market Committee clarified at that meeting that it views its inflation objective as symmetric.

There are few frequent bloggers among top central banker policymakers globally. As far as I could see, this was the first real blog post by Bullard himself.

In the post, he showed he was concerned about the backward-looking nature of the language the FOMC opted to use, which he argued was unfit for an inflation-targeting central bank.

A central tenet of inflation targeting is that the future expectations about deviations of inflation from target are critically important, whereas the past misses of inflation from target caused by shocks that hit the economy are less important. In my view, this central tenet of inflation targeting should be reflected in the FOMC’s statement on longer-run goals.

Bullard, a vocal supporter of inflation targeting, cautioned that the key sentence clarifying that "The Committee would be concerned if inflation were running persistently above or below this objective" was potentially confusing for Fed communications.

Recent communications on monetary policy decisions emphasize a criterion that the committee needs to be reasonably confident that inflation will return to target in the future. Indeed, when the FOMC decided to raise the policy rate from near zero at its December meeting, the post-meeting statement said that the committee "… is reasonably confident that inflation will rise, over the medium term, to its 2 percent objective." This assessment is forward-looking. In contrast, the committee's new language of "… if inflation were running …" in the statement on longer-run goals is a reference to past inflation, which renders it more backward-looking.

Good example of using a modern communication tool available to central banks to get one's message across.