G30 urges Fed to sharpen communication and policy execution

By AI, Created 11:13 AM UTC, May 20, 2026, /AGP/ – The Group of Thirty published a report on May 7, 2026, calling for changes to the Federal Reserve’s monetary policy framework to protect central bank independence. The study says the Fed should tighten its communication, clarify its role and strengthen its balance sheet policy toolkit after the 2025 framework review.

Why it matters: - The report argues Fed independence depends not only on policy goals, but also on how the central bank communicates and carries out monetary policy. - Better transparency and clearer rules could help preserve credibility, reduce confusion and support long-term inflation control. - The review comes after the Fed’s 2025 framework update, making the next phase about implementation, not just policy targets.

What happened: - The Group of Thirty published The Federal Reserve’s Monetary Policy Framework: More to Do to Buttress Independence on May 7, 2026. - William C. Dudley, chair of the Bretton Woods Committee and former president of the Federal Reserve Bank of New York, chaired and authored the report. - The report examines changes made in the Fed’s 2025 monetary policy framework review and says more work is needed. - The G30 hosted a live webinar on the report on May 7, 2026, with Dudley, Mervyn King and Masaaki Shirakawa. - A recording is available on the event page.

The details: - The report says the Fed should preserve independence through a stronger framework, better communication and clearer institutional responsibilities. - The 2025 review restored a symmetric 2% inflation target and moved away from flexible average inflation targeting. - The report calls for a clear framework for quantitative easing and quantitative tightening. - That framework should spell out when to use balance sheet tools, how to weigh costs and benefits, and how to exit those policies. - The report says the Fed should reassess the size and structure of its balance sheet and consider the impact of reducing its overall size. - The report urges the Fed to consider publishing detailed staff forecasts and to better connect economic projections with policy decisions. - The report recommends limiting forward guidance to periods when interest rates are near zero. - The report also calls for simpler public communication to reduce confusion. - The report says the Fed and the U.S. Treasury should have more clearly defined roles, especially on balance sheet policies and financial stability tools. - The report recommends an external review of Fed policy framework and operations. - The G30 said the working group included Mohamed El-Erian, Jacob Frenkel, Mervyn King, Guillermo Ortiz, Masaaki Shirakawa and Yi Gang.

Between the lines: - The report is a signal that the Fed’s credibility fight now extends beyond inflation targets to the mechanics of decision-making and messaging. - The emphasis on balance sheet tools suggests the G30 sees the post-crisis toolkit as still under-defined. - Calls for more precise roles between the Fed and Treasury reflect concern that blurred responsibilities can weaken accountability during stress.

What’s next: - The report says the Fed should revisit its framework again through an external review. - The G30 said interested readers can request a copy of the report from Press Officer Melissa Golding. - The group also directs readers to more information and membership bios.