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Speech
Remarks for the Panel Discussion “Why Did We Miscast Inflation?”
Inflation remains too high, and recent data – including several strong labor market indicators, as well as faster than expected retail sales and producer price inflation – all reinforce my view that we have more work to do, to bring inflation down to the 2 percent target. While optimistic there is a path to restoring price stability without a significant downturn, I am also well aware of the many risks and uncertainties, including the risk of a self-fulfilling loss of business and consumer confidence.
Journal Article
Monetary Policy Stance Is Tighter than Federal Funds Rate
The Federal Reserve’s use of forward guidance and balance sheet policy means that monetary policy consists of more than changing the federal funds rate target. A proxy federal funds rate that incorporates data from financial markets can help assess the broader stance of monetary policy. This proxy measure shows that, since late 2021, monetary policy has been substantially tighter than the federal funds rate indicates. Tightening financial conditions are similar to what would be expected if the funds rate had exceeded 5¼% by September 2022.
Speech
Bullard Speaks about the Fed Funds Rate and Inflation
St. Louis Fed President Jim Bullard discussed the Fed’s progress in tightening monetary policy to bring down high inflation. He spoke while participating virtually at a forum hosted by Barclays and the Centre for Economic Policy Research in London.“No matter how you look at it, we have a serious inflation problem in the U.S., and we’re missing our (2%) inflation target and the credibility of our inflation targeting regime is at risk,” Bullard said. He added that this level of inflation hasn’t been experienced since the late 1970s and early 1980s, when Paul Volcker was chairman of ...
Journal Article
How Quickly Do Prices Respond to Monetary Policy?
With inflation still above the Federal Reserve’s 2% objective, there is renewed interest in understanding how quickly federal funds rate hikes typically affect inflation. Beyond monetary policy’s well-known lagged effect on the economy overall, new analysis highlights that not all prices respond with the same strength or speed. Results suggest that inflation for the most responsive categories of goods and services has come down substantially from recent highs, likely due in part to more restrictive monetary policy. As a result, the contributions of these categories to overall inflation ...
Journal Article
Liquidity Dries Up
The Federal Reserve has been increasing the federal funds rate, but the interest rate banks pay on deposits have stood still, leading to outflows of bank deposits and the drying up of liquidity.
Journal Article
What Is the Monetary Standard? The Fed Should Tell Us
The Federal Reserve System (Fed) is a regular feature in the media. When the Fed communicates with the public, its focus is on forward guidance related to monetary policy—specifically, for achieving low unemployment and low inflation. Fed participants on the Federal Open Market Committee (FOMC) convey what they see as the likely path of policy, including changes in the federal funds rate, a standard monetary policy tool. Because financial markets find this information useful, news stories thoroughly cover Fed communication.However, such communication fails to explain the structure of the ...
Journal Article
Assessing the Costs of Rolling Over Government Debt
The US government has $21.4 trillion in outstanding Treasury debt in bills, notes, and bonds. Given the federal funds rate is up 4-5% over the past year, how expensive will it be to roll over maturing Treasury debt at these higher rates?
Speech
Perspectives on the Economy: Remarks at the Annual Convention of the Maine Bankers Association
Susan Collins shared her views about the economic outlook and monetary policy. Then she provided a few perspectives on banking in New England and in particular Maine – highlighting the importance of banks of all sizes to a vibrant, inclusive economy. She ended with a few points about the Fed’s work across the region, and the shared opportunities to collaborate in the public interest.
Speech
Monetary Policy Challenges in the Pandemic Recovery
President Collins shared charts with graduate students and faculty at an economics seminar at Harvard University, covering aspects of the economy she recently discussed at Wellesley College and as part of the Boston Fed’s 22nd Annual Regional & Community Bankers Conference.
Speech
Bullard Discusses Disinflation, Rate Increases and Economic Resilience on CNBC
During an appearance on CNBC, St. Louis Fed President Jim Bullard discussed disinflation, the federal funds rate and the resilience of the U.S. economy. To help curb inflation, Bullard said his target federal funds rate would be 5 3/8%. The target range for the rate currently is 4.5% to 4.75%.“I think we can get disinflation with a strong labor market, but we'll have to be credible in our policy and we'll have to react to the data as it comes up,” Bullard said.Bullard said the U.S. economy might be more resilient than financial markets thought six to eight weeks ago, and he expects ...