Monetary Policy and Financial Stability

I think it is difficult to ignore the role of asset prices in the dynamics of the past two business cycles: If the objective of monetary policy is a combination of low inflation and unemployment, I think it is difficult to argue that the Federal Reserve pursued an overly loose policy stance in the periods […]

Did the Republicans Force Bernanke’s Hand?

To what extent is the Fed responding to political pressures?  Of course, Federal Reserve officials like to believe they are above the fray, and vehemently deny that political considerations play any role in their decision-making process. They must be above the fray, otherwise the cherished independence would be broken. I know this is what I […]

Wild Week Leaves Fed Policy Intact

Last week was quite the rollercoaster – one I suspect Fed policymakers will find consistent with their general outlook.  The better than expected gains in nonfarm payrolls supports their claim that first quarter weakness will prove to be temporary, while the commodity price rout will give them the breathing room on inflation they felt they needed.  This combination should keep the Fed locked on their current policy trajectory.