Book Description

Monetary policymakers & central banks disagree sharply about the role of monetary aggregates in the conduct of monetary policy. These differences in views are reflected in the way the Federal Reserve & the European Central Bank (ECB) conduct monetary policy & communicate with the public. At the Fed., the Open Market Comm. no longer specifies targets or monitoring ranges for the monetary aggregates, & comm. members seldom mention the aggregates in their deliberations. In contrast, the ECB regularly examines the implications of money growth for the inflation outlook over the medium term to long term. This essay explains the reasons why the Fed. Reserve & ECB differ in their approach to the monetary aggregates. Charts & tables.