The stance of US monetary policy: an alternative measure

Knowing the stance of monetary policy is important for its successful implementation. Typically, observers look to the changes in the money supply and short-term interest rates to determine the stance of monetary policy. Sometimes, however, discerning the stance of monetary policy through these measures can be misleading. In this article, an alternative measure of the stance of US monetary policy is proposed and empirically examined, which appears to be a promising improvement over the standard metrics currently used.