The reflation of the American economy following the debilitating effects of the pandemic has begun. Recent increases in growth forecasts, the January jump in retail sales, trillions of dollars in fiscal aid and stimulus, as well as the prospect of a household-led boom over the next two years, have ... READ MORE >
monetary policy
Global fiscal policy: Reflation led by fiscal firepower
Despite efforts over the past four years to tear down the underpinnings of the global economy, pandemic economics has reinforced that this is indeed a global economy. Every one of the major-currency economies suffered through a health crisis and negative economic growth last year, according to the most ... READ MORE >
Bank of England: Deteriorating economic outlook and negative interest rates
The Bank of England at its meeting on Thursday is expected to keep its policy matrix unchanged as it downgrades its economic outlook and publishes its view on the use of negative interest rates. We expect the central bank to keep its policy rate at 0.1% and the total asset purchase program -- an ... READ MORE >
FOMC meeting: Fed adds to debate on further fiscal aid
Federal Reserve Chairman Jerome Powell said in the opening statement of his news conference on Wednesday that the arrival of vaccines has bolstered the economic outlook for later this year and noted the role of monetary policy in combating the economic downturn caused by the pandemic. At the same time, ... READ MORE >
Monetary policy and inflation in the modern era
The Fed is embarking on a new era in monetary policy, switching from its point target of 2% inflation to a target range of 1% to 3%. This change is predicated on longer-run structural changes in the economy that are inherently disinflationary, a real neutral interest rate near zero and much slower growth ... READ MORE >
FOMC policy update: Fed signals that the worst is behind the U.S.
Policymakers at the Federal Reserve on Wednesday signaled that the worst of the pandemic-induced recession had passed as its summary of economic projections and “dot plot” rate forecast both implied that the zero interest-rate policy would remain in place throughout the central bank’s forecast horizon ... READ MORE >
The post-coronavirus economy: What to expect, and what is needed
We think that the U.S. economy has ended its pandemic-induced free fall. Tentative signs of the recession’s nadir are evident in near real-time data across the economy. It is now time to begin considering the shape of the post-pandemic economy: What it will look like, whose interests are given ... READ MORE >
Powell’s statement is a necessary first step in addressing the coronavirus fallout
Federal Reserve Chairman Jerome Powell made a well-directed and much-needed statement on Friday, maintaining the possibility of a cut by the central bank in interest rates, in an attempt to take back control of the narrative on the Fed's response to the coronavirus outbreak. Powell's remarks, ... READ MORE >
How the Fed responds to economic downturns
Since the 1970s, the Federal Reserve has relied on manipulating expectations of short-term interest rates through cuts in its overnight policy rate in response to economic and manufacturing slowdowns. Reducing interest rates is thought to facilitate investment, which is necessary for economic growth and ... READ MORE >