Amid all the political craziness at home and around the world, you may not have noticed that one bit of traditional policy wisdom is making a comeback. The biggest development for 2017 could be that ‘austerity as stimulus’ is out and ‘stimulus as stimulus’ is back in a big way.[1] Following the election in Japan, […]
Blog Archive
Why has transparency been so damn confusing?
The theme of our recent series of posts on understanding FOMC actions and communications has been the well-disguised, steady predictability of FOMC policy. The basic story is that policy is driven by a consensus on the FOMC. The consensus tends to evolve slowly and predictably, and for some time now, the consensus has behaved consistently […]
A series on ‘Understanding FOMC actions and communications’ (Hint: two separate topics)
This post provides links to a series of related posts arranged earliest to most recent. Beyond the dots What will the Fed do? (June 2016 edition) What will the Fed do? (June 2016 update!) Why has transparency been so damn confusing? 19 voices, 12 votes, 1 policy What will the Fed do? (Jackson Hole update)
What will the Fed do? (June 2016, update!)
My previous post described the well-disguised, steady predictability of recent FOMC policy. All that’s out the window now. (No.) Brexit changes everything! (We’ll see.) Will the Fed’s intermeeting rate cut go negative? (Get ahold of yourself.) But Brexit is putting a wrinkle in this blog: I had promised that the next post would be entitled […]
What will the Fed do? (June 2016 edition)
Over the last several weeks, we’ve seen what Michael Mackenzie in the FT called a renewal of the market’s tortured dance with the Fed. The basic story seems to be that the Fed “moved policy to the sidelines” at its March meeting, causing market participants to discount any risk of a near-term rate increase. The […]
Six Degrees of Separation between Jobs and Inflation
Friday’s reported increase of 160,000 in nonfarm payrolls was less than the recent average. This doesn’t mean much for the macroeconomic outlook and, therefore, shouldn’t and probably won’t mean much for the path of monetary policy. Monthly nonfarm payroll gains bounce around a good deal and are substantially revised. Moreover, weather-especially winter weather–can dramatically affect […]
Beyond the dots
Since the last FOMC meeting, we have again heard cries of lost Fed credibility and of general confusion. In contrast, my colleagues and I at the CFE have been arguing for many months now that we would likely see what has in fact transpired. In our view, the Fed’s actions, including those at the March […]
Improving conventional unconventional policy
The Fed has taken the position that the distressing signals from around the world do not clearly warrant a large and definitive downward shift in the outlook for the U.S. While some folks might argue that point, let’s accept it. There is, nonetheless, a heightened probability of some sort of downturn, and policymakers and others […]
Are the Saudis Thinking Clearly? And Should We?
Given Saudi Arabia’s long-standing commitment to act as swing producer to stabilize prices, current Saudi behavior raises big questions. Why is Saudi Arabia pumping at historic rates in the face of a collapse in the oil price? And, as President Obama’s state of the union message highlights, what should be the U.S. policy response?
Still Crazy After All These Years
For the past several years, the Congressional Budget Office has been offering frightening forecasts about government debt growing out of control unless strong action is taken. While these forecasts have played a prominent role in policy debates, the CFE’s Jonathan Wright and Bob Barbera have for several years been arguing that those forecasts are, well, […]
Lunch and Tea with the Forecasters Club of NY
If you had your TV set tuned to CNBC… August 21, 2001, two commentators were watching Alan Greenspan get out of a car and head to his office. They discussed the color of his tie (maroon) and the brand of shoes he appeared to be wearing (Rockports).’ Danny Hakim, New York Times[1] Yesterday, I had […]
The Pause that Refreshes
How will the Fed respond to the recent drops in the stock market? We might get a hint from the Fed’s conduct after last August’s turbulence, which now looks like a dress rehearsal for the current problems. In that event, the Fed chose to forgo the widely-signaled liftoff in September, but then implemented liftoff amid […]