New challenges for monetary policy : a summary of the Bank's 1999 Symposium

After two decades of successfully restoring price stability in much of the world economy, central banks begin the next millennium facing a new set of challenges. One key task is how to conduct monetary policy in an era of price stability. Clearly, policymakers would like inflation to remain subdued. But how should monetary policy procedures be designed to ensure that inflation does not reappear as a serious policy problem? Another important question is whether central banks enjoy greater operational flexibility or face new constraints in an environment of low inflation. And recent crises in financial markets around the world pose an additional set of challenges for policymakers. Indeed, preserving global financial stability and dealing with extreme asset price and exchange rate movements have taken on greater urgency in many recent policy discussions.> To explore the implications of these issues, the Federal Reserve Bank of Kansas City held a symposium titled \\"New Challenges for Monetary Policy\\" at Jackson Hole, Wyoming, on August 26-28, 1999. The symposium brought together a cross section of distinguished experts from central banks, academic institutions, and financial markets from around the world.> Sellon and Buskas highlight the principal issues raised at the symposium and summarize the papers presented and the commentary. The first section provides an overview of the main issues and identifies areas of agreement and disagreement among program participants. The remaining sections summarize the viewpoints of the participants and their policy recommendations.