Commenter HL directed me to this slide from a presentation by the Mexican central bank:
HL suggested that this meant the Bank of Mexico is now “targeting the forecast”. It does sort of suggest that policy is being adopted, but it’s hard for me to be sure. Any comments would be welcome.
Let’s recall the mistakes made by the Fed in 2008:
1. Too much weight on inflation, too little on NGDP growth.
2. Growth rate targeting rather than level targeting.
3. Failure to target the forecast (as well as too little reliance on market forecasts.)
4. Failure to do “whatever it takes”.
That seems like a lot, but fixing some of these problems makes the other issues much less of a problem. Addressing problem #2 alone, or #4 alone, would have gone a long way toward making the 2007-09 recession much less “Great”.
When combined with David Beckworth’s recent post on level targeting, I’m becoming more optimistic about global trends in monetary policy.