Getting Monetary Policy Back on Track, edited by Michael D Bordo, John H Cochrane, and John B Taylor, is based on presentations and discussions from the Hoover Institution’s Monetary Policy Conference held in 2023. The background to the conference was the post-pandemic surge in inflation in 2021 & 2022, and the US Federal Reserve’s delayed response to these developments.
The inflation surge and the slow response of monetary authorities created a crisis of confidence in monetary policy. The inflation was driven by multiple factors, including pandemic-related supply chain disruptions, a surge in consumer demand as economies reopened, and the Russian invasion of Ukraine and the associated sanctions regime which significantly increased energy and food prices. Central Banks—particularly in the US and Europe—and some economists initially labelled the rising prices as ‘transitory’, expecting that the price pressure would subside as supply chains normalized. This led to a delay in tightening monetary policy, which may have allowed inflationary pressures to become entrenched.