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Tag Archives: Federal Reserve

Robert Hetzel on the monetary response to Covid19

There are few economists that have had a bigger influence on my thinking about monetary matters than former Richmond Fed economist Robert Hetzel. Bob is not only one of my biggest intellectual heroes, but also a very a good friend and I am therefore extremely happy that he has allowed to publish some of this insights and thoughts on Fed’s 50bp ’emergency’ rate cut today. Lars Christensen Fed and Covid19 By Robert Hetzel Cutting the funds rate just before an FOMC meeting sends a strong but...

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Is this really a currency war or just a tantrum?

Since the People’s Bank of China (PBOC) allowed the yuan to surpass the dreaded level of 7 to the dollar on August 11, rivers of ink have flowed citing a new matter of contention between the U.S. and China, namely using currencies to gain competitiveness or, more simply, a "currency war."Previous versions of this opinion piece were published by Forbes and El PaisTo describe the events as a currency war may seem logical because another type of “war” between the U.S. and China, namely the trade...

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All eyes on the Fed

Last week the US Federal Reserve left the federal funds rate unchanged and lowered the interest rate on excess reserves. We review economists’ recent views on the monetary policy conduct and priorities of the United States’ central bank system. The Federal Open Markets Committee (FOMC) held its third meeting of 2019 last week (April 30th and May 1st). Given the very recent change in monetary policy stance, there was no great anticipation of interest rate changes. However, despite how...

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The international role of the euro

The authors assess whether the euro area should pursue a greater international role for the euro, as outlined by European Commission president Jean-Claude Juncker, and how it might go about doing so. European Commission president Jean-Claude Juncker raised, in his latest State of the Union address on September 12th, an issue that has been somewhat dormant over recent years: the international role of the euro. Indeed, he announced that the Commission would present plans “to strengthen...

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How should the European Central Bank ‘normalise’ its monetary policy?

During the crisis, the ECB resorted to a number of unconventional monetary tools. This paper discusses how to phase out these policies and what the ‘new normal’ in monetary policy should look like. This policy contribution was prepared for the Committee on Economic and Monetary Affairs of the European Parliament (ECON) as an input for the Monetary Dialogue of 20 November 2017 between ECON and the President of the ECB.  Copyright remains with the European Parliament at all times...

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Powell’s Federal Reserve

With the appointment of Jerome Powell as the next Fed’s chairman, President Trump break a tradition of bipartisan re-nomination and chooses someone who is not an economy by formation. We review economist’s opinions on this choice and the challenges ahead. Kenneth Rogoff argues that with the appointment of Jerome Powell as the next Fed Chair, Donald Trump has made perhaps the most important single decision of his presidency. It is a sane and sober choice that heralds short-term continuity...

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Phillips vs. Pass-through, or the changing ECB understanding of inflation

This blog post looks at how the approach of the ECB to inflation has changed over the years. It shows the ECB has moved, over the years, from a small towards a large country approach, giving more weight to the improving employment conditions than to the appreciating exchange rate in deciding its monetary policy moves. Two basic approaches to inflation  There are basically two schematic approaches to assess and forecast inflation developments: the “small country” and the “large country”...

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The single monetary policy and its decentralised implementation: An assessment

Bruegel Annual Meetings 2017 The Annual Meetings are Bruegel’s flagship event. They offer a mixture of large public debates and small private sessions about key issues in European and global economics. In a series of high-level discussions, Bruegel’s scholars, members and stakeholders will address the economic policy challenges facing Europe. Speakers: Carlos Sallé Alonso, José Antonio Álvarez Álvarez, Agnès Bénassy-Quéré, Pervenche Béres, Matthias Buck, Grégory Claeys,...

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The Fed’s Unwinding

The Federal Open Market Committee (FOMC) held short-term interest rates steady on September 20th and announced that starting from October 2017 the Fed will gradually shrink its balance sheet, which grew considerably in response to the Great Recession. We review economists’ views on this move. Joseph Gagnon at PIIE thinks that the unexpected development was a further reduction in the median view of FOMC participants about where the short-term interest rate will settle in the long run....

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Raising the inflation target: a question of robustness

In an unexpected move, the Federal Reserve Chair Janet Yellet has recently brought up the issue of raising the inflation target. This blog argues that an increase in inflation targets may prove to be beneficial in achieving price stability in the long run. This would increase the credibility of central banks in achieving inflation goals and stave off the distortionary effects of deflation. By: Maria Demertzis Date: June 22, 2017 Topic: European Macroeconomics & Governance...

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