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.
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.
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.
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 DattaExecutive SummaryThis piece provides an overview of how the Federal Reserve (“Fed”) decided to require all emergency lending authorized under Section...
