To do its job right, the Fed must see what's wrong

THE US FEDERAL Reserve has begun a process with vast implications for the global economy: rethinking the framework by which it sets the interest rates that influence prices and lending in the US and just about everywhere else.

- Bloomberg

To get it right, the Fed first needs to recognise what's wrong.

At the January meeting of the policy-making Federal Open Market Committee, central bankers emphasised that the new framework must be "robust to a wide range of circumstances". This is a step in the right direction, given that the current framework, established in 2020, certainly wasn't robust to the Covid pandemic and its aftermath.