The Federal Reserve is gearing up to re-evaluate how it sets and communicates monetary policy in light of economic shifts of the last five years, chair Jerome Powell said Thursday. The big picture: The Fed is reviewing its monetary policy framework — the goals and methods it uses to set interest rate policy and communicate it to the public — for the first time since 2020.

"We may be entering a period of more frequent, and potentially more persistent, supply shocks—a difficult challenge for the economy and for central banks," Powell said in opening remarks at a two-day conference reconsidering the Fed's current approach to monetary policy, adopted in 2020 as the economy was still scarred by the pandemic.

Past changes to the Federal Reserve's longer-run strategy, including letting inflation run hotter than 2% for "some time," might no longer work for the current economy.