The Federal Reserve's interest rate decisions shape the economic landscape, influencing borrowing costs for everything from mortgages and auto loans to business investments. These policy changes directly affect whether businesses expand operations, invest in equipment, or increase staffing. At Employ America, we research how the Fed can better balance its dual mandate, advocating for approaches that prioritize achieving and sustaining full employment while utilizing more targeted tools to address inflationary pressures.
Monetary Policy
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Read the Latest
55 Posts
Despite widespread use by commentators and policymakers, the models commonly used to argue for the importance of "inflation expectations" are difficult to confirm empirically, and risk a hawkish policy bias.
Sep 14, 2021
Whenever inflation becomes a part of political or economic discourse, policymakers and commentators instinctively reach for narratives and models drawn from the experience of the 1970s inflation. However, these models offer little explanation for even adjacent experiences of inflation.
Jun 17, 2021
Given the Fed’s recent framework revisions and forward guidance commitment to maintain current interest rates until “maximum employment” is achieved, the Fed’s communication with respect to its assessment of “maximum employment” is overdue for a clarification.
Federal Reserve
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Oct 02, 2020
The Fed’s recent forward guidance on its zero interest rate policy was a welcome sign that the Fed’s monetary policy strategy is giving appropriate emphasis to the achievement of sustainably tight labor markets. We highlight four welcome takeaways worth celebrating and building upon.
Aug 27, 2020
The Fed has chosen to double down on an inflation-oriented framework for setting monetary policy. While there are some advantages in the current environment to an “average inflation targeting” scheme that affirmatively permits inflation to rise at least modestly past 2%, this approach is not particularly robust to a scenario
Jul 29, 2020
Here, we discuss six potential improvements to the Evans Rule that the Federal Reserve (Fed) should consider as it formulates its forward guidance strategy in response to the COVID-19 economic crisis.
Jul 28, 2020
By Skanda Amarnath & Sudiksha Joshi While the Federal Reserve (Fed) cannot unilaterally deliver a swift recovery from the COVID-19 economic recession, it can still play a useful supporting role through its commitment to keep interest rates low. The Fed faces the same zero lower bound (ZLB) constraint that it
The Fed now recognizes that its interventions have helped to create millions of jobs and promoted a better equilibrium in the long run. A deeper shift to its reaction function is now needed.
Whether you’ve been converted to #FloorGLI or you stick to the Fed’s preferred methods for framing economic developments, the case for the Fed to cut 50 basis points at the June FOMC meeting is underrated.
