Monetary Policy

It has now been almost exactly one year since the Fed started raising interest rates to combat inflation. When they started raising rates, the unemployment rate was at 3.6%. In February, the unemployment rate was… also at 3.6%. Even construction employment, a notoriously interest rate sensitive sector, remains

We try our best not to "bash" the Fed gratuitously; we believe that strong public institutions are important for solving society's biggest problems. But the events over the past four days should not be sugar-coated: we have a substantial Fed failure on our hands. We have

At the Senate Banking Committee’s Humphrey Hawkins hearing on Tuesday, Senator Warren questioned Chair Powell about the implications of the Fed’s projections for unemployment, which call for an unemployment rate of 4.6% by year’s end, around an additional two million people without jobs. Powell was resistant

“For the first time, we [central bankers] have had to really study [supply chains] carefully” - Chair Powell As we have argued, a substantial portion of post-pandemic inflation can be traced to supply chain disruption. What was a loosely woven mesh pre-pandemic snapped and disconnected in different places, for different

Retail sales showed strength in January. As a proxy for gross labor income trends, it confirms both (1) the resilience we're seeing in the labor market and (2) the amplified role of residual seasonality (December understates growth, January overstates/rebounds). Real-time data-watching was already complicated enough due to

We'll have our usual monthly inflation preview soon, but for those curious, here's a bit of a preview to the preview... We all should take heart in how 2022H2 highlighted the possibility and plausibility of a 'soft landing'—disinflation without more unemployment—at odds

How do we evaluate model choice under uncertainty as data points are still coming in? If one model implies prescriptions with direct, catastrophic welfare costs that are empirically difficult to reverse, should the consequences affect how much weight we give the model?

In our previous piece in our vacancies series, we took a deep dive into Ball, Leigh and Mishra (2022), “Understanding U.S. Inflation During the COVID Era,” a paper presented at the Brookings Papers on Economic Activity Conference in September 2022. The paper, which warned that the Fed’s...

The Fed is arguing that inflation is driven by the cost-push impacts of wage growth on service prices. This is a traditional view, but the pandemic recovery has been anything but textbook. In our view, the primary nexus is a demand-pull relationship. The core question for the Fed ought to