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Speech
Bullard Discusses Policy Rate Increases and His Views of U.S. Recession Predictions
St. Louis Fed President Jim Bullard talked about his preferences for raising the policy rate and his views of recession predictions in remarks during a European Economics and Financial Centre virtual discussion.Bullard said the U.S. economy continues to do very well and that the country has created about 2.7 million jobs in the first six months of the year, “an outstanding number even for a full year.”Although financial markets have been predicting a U.S. recession next year, Bullard said he is “a little skeptical that we’ll get to a recession.” The U.S. economy is slowing, but ...
Output Gaps, the Taylor Rule and the Stance of Monetary Policy
The Taylor rule offers a formula to calculate a prescribed policy rate. How do alternative measures of the output gap affect this prescribed rate?
Discussion Paper
How Much Is Priced In? Market Expectations for FOMC Rate Hikes from Different Angles
It is essential for policymakers and financial market participants to understand market expectations for the path of future policy rates because these expectations can have important implications for financial markets and the broader economy. In this post?which is meant to complement prior Liberty Street Economics posts, including Crump et al. (2014a, 2014b ) and Brodsky et al. (2016a, 2016b)?we offer some insights into estimating and interpreting market expectations for increases in the federal funds target range at upcoming meetings of the Federal Open Market Committee (FOMC).
Speech
Bullard Discusses Policy Rate Needed to Lower Inflation with Bloomberg TV
St. Louis Fed President Jim Bullard discussed the policy rate needed to get inflation down during an Oct. 19 interview on Bloomberg TV. He gave the interview at the St. Louis Fed ahead of the annual Homer Jones Memorial Lecture.In the September Summary of Economic Projections, the Federal Open Market Committee seemed to be coalescing around further rate increases at upcoming meetings, even by the end of the year, Bullard said. He noted that most of that has been priced into markets. He said he would anticipate that’s having an impact, which is good news for trying to get inflation ...
Working Paper
Monetary Policy Interactions: The Policy Rate, Asset Purchases and Optimal Policy with an Interest Rate Peg
We study monetary policy in a New Keynesian model with a variable credit spread and scope for central bank asset purchases to matter. A novel financial and labor market interaction generates an endogenous cost-push channel in the Phillips curve and a credit wedge in the IS curve. These channels arise due to a liquidity premium to long-term debt present in our model. The “divine coincidence” holds with the nominal short rate and central bank balance sheet available as policy tools—dual-instrument policy. Targeting the liquidity premium using balance sheet policy provides a determinate ...
Newsletter
Teaching the Linkage Between Banks and the Fed: R.I.P. Money Multiplier
The money multiplier has been a standard concept in introductory economics classes for decades, but changes in the way the Fed implements monetary policy has made the model obsolete. This issue provides information about the linkages between the Fed and the banking system and provides teaching suggestions.
Discussion Paper
Reconciling Survey- and Market-Based Expectations for the Policy Rate
In our previous post, we showed that the gap between the market-implied path for the federal funds rate and the survey-implied mean expectations for the federal funds rate from the Survey of Primary Dealers (SPD) and the Survey of Market Participants (SMP) narrowed from the December survey to the January survey. In particular, we provided explanations for this narrowing as well as for the subsequent widening from January to March. This post continues the discussion by presenting a novel approach called ?tilting? that yields insights by measuring how much the survey probability distributions ...
Speech
Bullard Discusses U.S. Monetary Policy with CNBC
St. Louis Fed President Jim Bullard discussed inflation, the tapering of the Fed’s asset purchases, and his projections for the policy rate in 2022 during an interview on CNBC’s Squawk Box Europe. The interview was recorded Nov. 9.
Gauging the Fed’s Current Tightening Actions: A Historical Perspective
In 2022, the Fed started its current tightening cycle. How does it compare with other cycles in the past 40 years in terms of the magnitude of policy rate hikes?
Speech
Bullard Discusses Inflation and His Views on the Policy Rate with Yahoo Finance
St. Louis Fed President Jim Bullard shared his views on the latest inflation data and Fed action needed to put downward pressure on inflation. During an interview with Yahoo Finance, he also said that the probability of a U.S. recession is not particularly elevated at this time.Asked about the latest CPI report, Bullard said, “my takeaway is that inflation is broader and more persistent than many have thought and that the Fed will have to act in order to keep inflation under control.” He added that the Federal Open Market Committee (FOMC) has a plan in place—a 50-basis-point increase in ...