Key Takeaways from President Williams’s Speech at the Hoover Monetary Policy Conference

Judy DeHaven

In remarks delivered at the Hoover Institution, New York Fed President John C. Williams discussed three key principles derived from monetary policy theory and experience that help guide central banks in achieving price stability.

He said:

“Years of experience—and years of careful analysis—have taught us that, first and foremost, central banks must own the responsibility for maintaining low and stable inflation and have the independence of action to achieve that goal.”

“Theory and experience have also shown the importance of transparency and clear communication, including setting an explicit, numerical longer-run inflation target, and of taking appropriate actions to support the achievement of that goal.”

“That leads to the third lesson: the importance of well-anchored inflation expectations. By communicating an explicit inflation target—and then delivering inflation consistent with that target—central banks earn credibility with the public. That helps anchor expectations, which, in turn, contributes to low and stable inflation.”

President Williams said the three principles grew out of the lessons learned from a quarter century of low and stable inflation and well-anchored inflation expectations leading up to the pandemic. When severe imbalances between supply and demand, exacerbated by Russia’s war in Ukraine, caused inflation to skyrocket in 2022, the three principles helped central banks address the spikes in inflation and work toward achieving price stability.

“The future is uncertain,” President Williams said. “But as we continue to move closer to our 2 percent longer-run inflation goal, I’m confident we have the foundation of theory and experience to guide us in restoring price stability and set the stage for sustained economic prosperity. We are committed to getting the job done.”

Read the full speech.