2019-09-09 20:38:00 Mon ET
federal reserve monetary policy treasury dollar employment inflation interest rate exchange rate macrofinance recession systemic risk economic growth central bank fomc greenback forward guidance euro capital global financial cycle credit cycle yield curve
Harvard macrofinance professor Robert Barro sees no good reasons for the recent sudden reversal of U.S. monetary policy normalization. As Federal Reserve Chair Jerome Powell yields to the persistent demands of a vocal president, the FOMC approves an interim interest rate cut by quarter point to 2%-2.25%. This rate cut represents a clear departure from the current business cycle of interest rate hikes in recent years. Barro advocates the Taylor monetary policy rule that the nominal interest rate should rise in response to higher inflation and economic output both relative to their targets. In accordance with the key Taylor monetary policy rule, the nominal interest rate normally tends toward a gradual long-term equilibrium path.
In this light, Barro regards the recent interest rate reduction as a special deviation from the prior path of U.S. monetary policy normalization. Federal Reserve Chair Jerome Powell seems to justify the recent interest rate cut in terms of the fact that U.S. inflation remains low and tame as the economy operates near full employment despite continual trade escalation between the U.S. and China. Barro indicates the clear and present danger that the recent rate reduction represents a dovish Powell response to many stock market analysts and the Trump administration.
If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.
2019-03-29 12:28:00 Friday ET

Federal Reserve Chair Jerome Powell answers CBS News 60 Minutes questions about the recent U.S. economic outlook and interest rate cycle. Powell views the c
2023-10-21 11:32:00 Saturday ET

Walter Scheidel indicates that persistent European fragmentation after the collapse of the Roman Empire leads to modern economic growth and development.
2019-07-11 10:48:00 Thursday ET

France and Germany are the biggest beneficiaries of Sino-U.S. trade escalation, whereas, Japan, South Korea, and Taiwan suffer from the current trade stando
2018-04-20 10:38:00 Friday ET

Allianz chairman Mohamed El-Erian bolsters a new American economic paradigm in lieu of the Washington consensus. The latter dominates the old school of thou
2019-11-13 11:34:00 Wednesday ET

The new Brexit deal can boost British pound appreciation and economic optimism. British prime minister Boris Johnson wins the parliamentary vote on his new
2017-12-23 10:40:00 Saturday ET

Despite having way more responsibility than anyone else, top business titans such as Warren Buffett, Charlie Munger, and Oprah Winfrey often step away from