Blog Archive

CFE Analysis | Fed

Rosy scenarios, Monetary policy, and Trump

Another year of well-disguised, steady predictability in Fed policy is in the books, and the FOMC hit the trifecta at the December meeting. The Fed did what policymakers had clearly indicated they would do; the FOMC said what any reasonable policymaking body would say under these circumstances; and the dots, as usual, created a carnival […]

CFE Analysis | Fed

What will the Fed do? Dec. 2016 edition

Like most folks who focus on such things, I expect a 25 basis point increase in the federal funds rate target range at the December FOMC meeting. Since mid-August, I’ve said that under the Fed’s consistent MO, if the economy did not break strongly in either way, we’d get one rate rise this year—most likely […]

CFE Analysis | Macro

A Trump Tantrum?

The pre-election views that a Trump victory would mean a market route proved way off the mark. Instead, as of early December, the stock market and bond yields have jumped and credit spreads have tightened. The market moves, according to a popular storyline, reflect bets on a rosy Trump scenario in which Trumpist policies—whatever their […]

CFE Analysis

Central banks, who needs 'em?

The Swedish Riksbank just published a volume on Rethinking the Central Bank Mandate. The Riksbank, the world’s first central bank, is now working to engage the public in a thoroughgoing examination of what central banks should be doing today and in the future. We could use a similarly thoughtful discussion here in the U.S., but […]

CFE Analysis | Fed

Understanding Fedspeak

Yesterday, CFE joined the Hutchins Center at Brookings in hosting a meeting on Fed communication. We had a vigorous discussion among an impressive group of current and former Fed officials: Ben Bernanke, Alan Blinder, Don Kohn, and Jay Powell. The Fed’s listening audience was represented by the press, bloggers, and Fed watchers: Tim Duy, Ylan […]

CFE | Spotlight

JHU Student Solomon Polansky Publishes on Currency Pegs

Solomon Polansky, ’19, is a mechanical engineering major and varsity fencer. This past summer, instead of just poking around (as fencers are wont to do), Solomon had an internship at the Federal Reserve Bank of Minneapolis. While at the Fed, he and Douglas Clement co-authored an interesting piece on currency pegs and why they don’t […]

CFE Analysis | Fed

What will the Fed Do? (Nov. 2016 FOMC edition)

I hate to pull your attention away an edifying display of democracy in all its glory, so this will be brief. My prediction for today’s FOMC meeting is slightly different from what I stated before the January FOMC, but utterly unchanged from before Chair Yellen’s August Jackson Hole speech. For about a year now, I’ve […]

CFE Analysis | Fed

Six Degrees of Separation in Practice

In a recent Financial Times article, Faust notes: [A] growing chorus of voices as diverse as Donald Trump, the Republican candidate for the presidency, and Martin Feldstein, former chief economic adviser to president Ronald Reagan, and now a professor at Harvard, are demanding that the Federal Reserve aggressively tighten monetary policy. Mr Trump’s reasoning is […]

CFE Analysis | Fed

What will the Fed do? (Sept. FOMC update)

After last night’s post, I got emails accusing me of being a two-handed economist. While anatomically correct, I take the point, so I’ll add this note saying that my view of likely policy is where it was in the Jackson Hole update. A quick summary: I’ve been arguing that the consensus of the FOMC, as […]

CFE Analysis | Fed

We love a good sequel, but …

Over the last several weeks, investors faced the realizations that the Fed might take one more step on the road to normalization and that Mario Draghi’s ‘Do what it takes’ might have morphed into ‘if pushed, we could do a bit more.’ This predictably brought a jump in bond yields around the world and talk […]

CFE Analysis | Fed

What will the Fed do? (Jackson Hole update)

As I said to some of you just before the speech, if the same framework were in place, we should hear more of the sort of talk we’ve heard for three years in communication on behalf of the consensus: job market gains continuing; repeated transitory shocks still holidng down inflation; gradual rate increases continuing. That’s pretty much what happened.

CFE Analysis | Fed

19 members, 12 voters, 1 policy

Dante’s seventh ring of hell, as I recall, is being forced to serve on a large committee. But imagine that you come across a large committee that somehow functioned effectively. Implausible certainly,