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Journal Article
Measuring the Stance of Monetary Policy on and off the Zero Lower Bound
Taeyoung Doh and Jason Choi propose a new ?shadow? short-term interest rate to measure the stance of policy when the federal funds rate was constrained by the zero lower bound.
Speech
The Right Tools for Our Time
Remarks at NABE/Bundesbank International Economic Symposium Eltville am Rhein, Germany.
Journal Article
The Evolving Role of the Fed’s Balance Sheet: Effects and Challenges
In this article, Chaitri Gulati and A. Lee Smith present evidence that the Federal Reserve’s expanded balance sheet, with a large portfolio of long-duration assets, has provided a significant amount of policy accommodation in recent years, depressing long-term interest rates by about 1.6 percentage points as of early 2022. They also argue that the FOMC’s plan to remove this accommodation through the passive runoff of maturing securities may prove challenging. They project that the downward pressure the balance sheet is currently placing on longer-term interest rates will only gradually ...
Newsletter
Inflation Expectations, the Phillips Curve, and the Fed’s Dual Mandate
This Summer 2021 issue of Page One Economics describes how to think about stable prices, how inflation has evolved in recent years, how the relationship between inflation and employment is changing, and what the Federal Open Market Committee (FOMC) has recently stated about its strategy to meet its price stability goal.
Journal Article
Reflections on Monetary Policy in 2022
To bring down inflation, the FOMC has been removing monetary policy accommodation in 2022. St. Louis Fed President Jim Bullard reflects on the year.
Discussion Paper
Who’s Borrowing and Lending in the Fed Funds Market Today?
The Federal Open Market Committee (FOMC) communicates the stance of monetary policy through a target range for the federal funds rate, which is the rate set in the market for uncollateralized short-term lending and borrowing of central bank reserves in the U.S. Since the global financial crisis, the market for federal funds has changed markedly. In this post, we take a closer look at who is currently trading in the federal funds market, as well as the reasons for their participation.
Journal Article
Evaluating Quantitative Easing: The Importance of Accounting for Forward Guidance
During the COVID-19 pandemic crisis, policymakers used large-scale asset purchases (LSAPs) along with forward guidance about the future path of the federal funds rate to help stabilize financial markets. However, policymakers and economists have yet to reach a consensus on the efficacy of LSAPs in providing accommodation and improving macroeconomic outcomes. Because announced changes in LSAPs often coincide with changes in forward guidance, the market responses to these two tools can be difficult to disentangle and each tool’s efficacy challenging to evaluate.Brent Bundick and A. Lee Smith ...
Journal Article
Inflation in 1972: A Cautionary Tale
The path of inflation over the past two years looks strikingly similar to the path observed during the 1970s,when the Federal Open Market Committee shifted its focus away from fighting inflation before pricepressures were fully under control. Although policymakers in both the 1970s and today have facedextraordinary challenges, future perceptions of current policy will likely be defined primarily by theoutcome of the Committee’s attempts to curb inflation, rather than the circumstances surrounding it.
A Look at Fed Tightening Episodes since the 1980s: Part I
An inverted Treasury yield curve—an historically accurate predictor of recessions—has followed two-thirds of the Fed’s tightening episodes since the early 1980s.
President Bullard Explains His Recent FOMC Dissent
St. Louis Fed President Jim Bullard discusses why he cast a dissenting vote at the FOMC meeting in March 2022.