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Mester advocates for Fed to use rules-based approach when setting interest rates

Mester advocates for Fed to use rules-based approach when setting interest rates

Finance
The Federal Reserve should follow rules when making policy to give the public a better understanding of the central bank's actions, Cleveland Fed President Loretta Mester said Wednesday.A debate has lingered for years over whether the Fed ought to use economic benchmarks as triggers for interest rate hikes and other actions.In a speech delivered at Rutgers University, Mester became the first sitting Fed official to openly advocate a rules-based approach, though she did not push for a specific rule to follow. [The Cleveland Fed web site has a list of recommendations for which rules are worth following.]"I am not advocating setting policy mechanically according to a simple policy rule; no rule works well enough across a variety of economic models and circumstances," Mester said, according to...