In 1977, when I started my first job at the Federal Reserve Board as a staff economist in the Division of International Finance, it was an article of faith in central banking that secrecy about monetary policy decisions was the best policy: Central banks, as a rule, did not discuss these decisions, let alone their future policy intentions.
The monetary policy committee could either keep rates constant, increase them, or bring them down. There are three options possible compared to when it is accommodative.
The role of monetary policy is to smooth out business cycles by promoting steady inflation and healthy labor markets, but modern central bankers have taken an activist turn.
Beyond monetary policy, fiscal policy has traditionally played an important role in dealing with severe economic downturns.
