Fed set for a broad review on how it conducts policy in 2019

The Federal Reserve in 2019 will launch a broad look at how it conducts policy and conveys what is doing to the public.

Central bank officials announced Thursday that they will look at “strategies, tools, and communication practices” the Fed uses to formulate monetary policy. Such a review has been a topic of discussion at recent Federal Open Market Committee meetings.

“With labor market conditions close to maximum employment and inflation near our 2 percent objective, now is a good time to take stock of how we formulate, conduct, and communicate monetary policy,” Fed Chairman Jerome Powell said in a statement.

Recent FOMC meetings have featured discussions about how the Fed will handle the next downturns that come along.

During and after the financial crisis, the Fed lowered its benchmark rate to near-zero and initiated a series of asset purchases aimed at helping the financial markets and providing a wealth effect.

The new effort will feature a conference June 4-5 in Chicago that will feature speakers outside the system. Reserve bank districts around the country also will host public events to get input from “a wide range of stockholders.”

Various Fed officials have publicly talked about the importance of a review.

Cleveland Fed President Loretta Mester said earlier this year that the Fed should use monetary rules as a way to better communicate its moves to the public.

At the August FOMC meeting, Chairman Jerome Powell said the committee “would likely resume a discussion of operating frameworks in the fall,” according to meeting minutes. It is rare for individual member’s comments to be singled out in the summaries.

The September minutes noted that a couple members said “it would be desirable to assess the Committee’s strategic approach to the conduct of policy and to hold a periodic and systematic review of the strengths and weaknesses of the Committee’s monetary policy framework.”