Fed Policy
The Framework Review and Forward Guidance center labor market outcomes over inflation in evaluating interest rate policy. However, the Fed haven't clarified how they will evaluate inflationary dynamics under the new regime.
Given Mnuchin’s stated intent to act in violation of the CARES Act, Chair Powell should reconsider his decision to transfer the funds back to Treasury, or at least clarify that they are for the sole purpose of being returned to the Exchange Stabilization Fund.
While The Shock may have ended, labor market indicators suggest that we still need to respond appropriately to The Slog if we are to avoid a repeat of the lackluster “jobless recovery” following the 2008 crisis.
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.
By Skanda Amarnath, Alex Williams, and Arnab Datta Executive Summary This piece provides an overview of how the Federal Reserve (“Fed”) decided to require all emergency lending authorized under Section 13(3) of the Federal Reserve Act be conducted at a “penalty rate,” as well as its policy ramifications. In
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
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.
State governments are on the front line of the COVID-19 pandemic and its economic fallout. The pace of the Federal response remains slow and local funding needs are still at risk of going unmet.
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.
