MNI BRIEF: Fed Communication Not Reaching Households -Mester

The Fed's announcement in August of a new operating framework to shift to a flexible system of inflation targeting was largely ignored by the broader public, Cleveland Fed President Loretta Mester said Wednesday.

Cleveland Fed research "suggest that more work needs to be done on policy communications to ensure that households will understand the policy strategy and then incorporate it into their expectations and actions," she said in remarks prepared for a Money Macro and Finance Society virtual conference.

Only a small group of consumers have heard of the Fed's new operating framework and those that did had little recognition about what changed, suggesting the new strategy's effectiveness by altering inflation expectations and inflation "will likely come from the expectations and actions of sophisticated financial mar­ket participants who closely follow monetary policy," she said.