The Evolution of Monetary Policy: Critical Issues That Have Shaped Monetary Policy and the SOMC

Monday, October 14, 2024
Hoover Institution | Stanford University

The Evolution of Monetary Policy: Critical Issues that have Shaped Monetary Policy of the SOMC over 50 years. Michael Bordo and Mickey Levy, two members of the Shadow Open Market Committee, presented a lengthy paper that described the origins of the SOMC that was established during the high-inflation 1970s and the evolution of the Committee and monetary policy. They emphasized that the SOMC, which made its mark as an advocate of Milton Friedman's monetarism and likely influenced the Paul Volcker-led Fed's successful disinflationary monetary policy in the late-1970s, has evolved in its focus and has continued to provide sound advice on monetary policy that emphasizes the importance of rules-based policies that focus on low inflation. Analytical comments were made by the two discussants, George Tavlas of the National Bank of Greece and David Wheelock of the Federal Reserve Bank of St Louis. Tavlas focused on the benefits of monetarism in the 1970s while Wheelock discussed the important role of the Federal Reserve Bank of St Louis in heightening the role of money in monetary policy and the developing of the SOMC.