In a paper released Thursday, Richard Clarida, Chair of Fed Vice Chair Richard Clarida said that monetary policy should be normalized this year, and that it would be consistent with the Federal Reserve's new average inflation targeting framework.
Clarida believes that the labor market will reach maximum employment by the end of 2022 if the unemployment rate falls to 3.5%. The outlook and so long as inflation expectations remain well anchored at the 2 percent longer-run goal of policy normalization in 2022 would, under these conditions, be fully consistent with our new flexible average inflation targeting framework, Clarida wrote.
The unwelcome inflation surge that started last year will prove to be largely transitory under appropriate monetary policy, according to Clarida. He believes that the underlying inflation rate is close to the Fed's 2% longer-run target and that pressures may be lessened due to supply chain bottlenecks.
The Fed official said this week that he will resign on Friday. com markets us feds-clarida resign-jan 14 two weeks ahead of the end of the term - 2022 -- 01 -- 10, two weeks ahead of the end of his term. His resignation came after he corrected his previous disclosure late last month to show he sold a stock fund and then swiftly repurchased it shortly before the Fed announced an array of rescue efforts to stem the economic fallout from the coronaviruses epidemic.