Dead-band Monetary Policy: A Practitioner's Case against Point-targeting

A 50-basis-point Fed rate move sustained for a year moves inflation by only 0.09–0.49 percentage points — below the 0.27–0.37 real-time measurement noise floor — while the rapid 2021 money-supply expansion was overlooked before inflation hit four-decade highs. The paper argues for a dead-band regime: hold the funds rate constant while core PCE stays between 1.5% and 3.0%, and move only when inflation breaches the band or when explicit money-growth or inflation-expectations triggers fire, with an accompanying fiscal assessment.

@misc{2026_dead_band_monetary_policy,
  title  = {Dead-band Monetary Policy: A Practitioner's Case against Point-targeting},
  author = {Samir Varma},
  journal = {SSRN Working Paper},
  year   = {2026},
  doi    = {10.2139/ssrn.7233381},
  url    = {https://ssrn.com/abstract=7233381},
}