monetary policy

This tag is associated with 36 posts

Monetary Policy – We have reached the limit of what it can be expected to do

Though the U.S. economy is apparently at or close to full employment, wages have barely budged above the level that would be justified by productivity increases and inflation alone. There is little or no inflationary pressure. The so-called Phillips curve that once mapped the inverse relationship between unemployment and inflation is not serving as a … Continue reading

FRB March 4, 2015 Beige Book on Employment, Wages, and Prices

Employment, Wages, and Prices Employment levels remained stable or continued to grow in most Districts and across a variety of sectors. Contacts in several Districts noted strong labor demand and challenges filling a variety of skilled positions. Firms in the Philadelphia District reported positive employment trends in a broad range of sectors, with the majority … Continue reading

Can growth alone tackle unemployment? No, fiscal policy must be as growth-friendly as possible

Can growth alone tackle unemployment? Evidence is summarized in Figure 2, which shows the growth-jobs nexus using two alternate measure of the state of labor markets, the unemployment rate and the growth rate of employment. The left panel of Figure 2 shows that, among advanced economies on average, unemployment falls by a third of a … Continue reading

Philadelphia Fed on Labor Market – Significant progress has been made

Last week’s employment numbers showed employers adding 214,000 jobs in October. Revisions for September and August added 31,000 more jobs than originally estimated. Interestingly, what we once thought was a weak jobs report for August now shows we added 203,000 jobs, which means that we have had nine months of job growth above 200,000 for … Continue reading

Monetary Policy in US – The FED ends quantitative easing

With the U.S. economy showing signs of life, the Federal Reserve moved Wednesday to end billions of dollars in monthly bond purchases aimed at boosting growth. The central bank had initiated the policy, known as “quantitative easing,” in 2008 to keep interest rates low and boost economic activity following the financial crisis. Six years later, … Continue reading

Monetary policy and inequality in the US – The links

Possible channels linking monetary policy and inequality  Proponents of this view focus on two channels through which monetary policy affects inequality. Heterogeneity in income sources While most households rely predominantly on labour incomes, for others financial income, business income, or transfers may be more important. If expansionary policy raises profits by more than wages, wealth … Continue reading

The Political Stance of Monetary Policy in US – Janet Yellen on Inequality

No doubt there are some political risks here. But was she supposed to remain silent on inequality for her entire tenure? For the Chair of the nation’s most powerful economic institution to ignore one of most powerful economic trends of our time would be close to a dereliction of duty. Arguments are raging over the … Continue reading

Monetary Policy in US, September 17, 2014 – There is sufficient underlying strength in the broader economy to support ongoing improvement in labor market conditions

The Committee currently judges that there is sufficient underlying strength in the broader economy to support ongoing improvement in labor market conditions. In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions since the inception of the current asset purchase program, the Committee decided to make … Continue reading

US – Federal Reserve has reduced unemployment by 0.13%

A paper written by two staff members of the Federal Reserve Bank of Atlanta tried to quantify what all the Fed’s new money creation and related measures have accomplished. They conclude that unemployment today would be 0.13% higher without the radical measures and 1.0% higher if nothing at all had been done. Chosen excerpts by … Continue reading

US Monetary Policy – The ‘balanced approach’ to a dual mandate in a figure

The January 2012 statement of long-run monetary policy strategy clearly expresses the FOMC’s policy intentions: It states that the FOMC’s explicit inflation objective is 2 percent for the price index for personal consumption expenditures (PCE) in the long run and that maximum employment is associated with a sustainable unemployment rate that properly reflects structural developments … Continue reading

US Monetary Policy – Too soon for talk of rate hikes says Dallas Fed President

t’s too soon for the Federal Reserve to begin thinking about raising interest rates despite a strengthening U.S. economy, Dallas Fed President Richard Fisher said on Sunday.  Mr. Fisher, a self-described inflation hawk who opposed the central bank’s latest round of bond purchases, said the weakness in first quarter U.S. economic growth, which nearly stalled … Continue reading

US – Short and long-term unemployment exert equal downward pressure on price inflation says FEDS research

In the years following 2009, long-term unemployment has been very elevated while inflation has fallen only moderately, raising the question of whether the long-term unemployed exert less downward pressure on prices than the short-term unemployed, perhaps because such potential workers are disconnected from the labor market. However, empirical evidence is mixed. This analysis demonstrates that … Continue reading

Monetary Policy in Sweden – Social Democrats call for employment target

Sweden’s Left Party wants the Riksbank to broaden its target to include employment when it sets interest rates. The party, which supports the opposition Social Democrats leading in most polls ahead of September elections, also advocated for looser budget rules to cut joblessness in the largest Nordic economy. The jobs objective should complement the bank’s … Continue reading

Monetary Policy in US – Yellen: The Fed is determined to improve employment situation

Janet Yellen, the Federal Reserve chairwoman, devoted more than an hour last week talking by telephone with three Chicago area residents struggling to find jobs. On Monday, she made their stories the centerpiece of the first public speech in her new job, delivering a strong statement about her concern over unemployment, her conviction that the … Continue reading

Yellen on the Unemployment Target – What did she say ?

Transcript of Chair Yellen’s Press Conference March 19, 2014 CHAIR JANET L. YELLEN. Good afternoon. I am pleased to join you for the first of my post-FOMC press conferences. Like Chairman Bernanke before me, I appreciate the opportunity these press conferences afford to explain the decisions of the FOMC and respond to your questions.  The … Continue reading

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