Category Archives: Monetary Policy

Reserve Balances and the Fed’s Balance Sheet in the Future

An important part of the Fed’s normalization policy is to reduce its holdings of securities and thereby reserve balances—deposits of banks at the Fed—used to finance these holdings. As I argued when quantitative easing began in 2009, this reduction should … Continue reading

Posted in Financial Crisis, Monetary Policy, Regulatory Policy

R-Star Wars

In a recent speech at the Economic Club of New York, Fed Governor Jay Powell stated that the endpoint of the Fed’s normalization process “will occur when our target reaches the long-run neutral rate of interest. Estimates of that rate … Continue reading

Posted in Monetary Policy

ECB Watching

Hundreds of financial market participants and news reporters showed up for the 18th annual “ECB and its Watchers” conference in Frankfurt last week. I was one of the speakers as I was at the first conference in 1999. It was … Continue reading

Posted in Monetary Policy

A New Hearing and, Possibly, a New Phase in Monetary Policy

Today’s hearing of the House Monetary Policy subcommittee—the first of the new Congress with the new chair Andy Barr from Kentucky—provided a good opportunity to discuss policy in light of new and different decisions by the Fed, new and different … Continue reading

Posted in Monetary Policy

Benefits of Comparing Policy with Reference Rules

In a recent VOX article, Henrike Michaelis and Volker Wieland write favorably about the approach taken by Fed Chair Janet Yellen in a recent speech where she compares recent Fed policy actions with several monetary policy rules—including the Taylor rule—much … Continue reading

Posted in Monetary Policy

Monetary Policy Strategy Statements Should Have a Strategy

At its meeting this week the Fed decided not to post changes in its “Longer-Run Goals and Monetary Policy Strategy” as might have been expected as part of its annual organizational meeting actions as it did last year at this … Continue reading

Posted in Monetary Policy

Good Progress on Describing and Comparing Monetary Strategies

Janet Yellen visited San Francisco and Stanford last week. She gave two interesting talks about monetary policy, which together, in my view, break new ground, and are worthy of more discussion. At the Commonwealth Club in San Francisco she briefly … Continue reading

Posted in Monetary Policy