Harvard macrofinance professor Robert Barro sees no good reasons for the recent sudden reversal of U.S. monetary policy normalization.

Laura Hermes

2019-09-09 20:38:00 Mon ET

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.

Blog+More

White House economic advisor Gary Cohn resigns due to his opposition to President Trump's protectionist tariff stance.

Peter Prince

2018-03-02 12:34:00 Friday ET

White House economic advisor Gary Cohn resigns due to his opposition to President Trump's protectionist tariff stance.

White House top economic advisor Gary Cohn resigns due to his opposition to President Trump's recent protectionist decision on steel and aluminum tariff

+See More

Apple is now the world's biggest dividend payer with its $13 billion dividend payout.

Dan Rochefort

2017-04-19 17:37:00 Wednesday ET

Apple is now the world's biggest dividend payer with its $13 billion dividend payout.

Apple is now the world's biggest dividend payer with its $13 billion dividend payout and surpasses ExxonMobil's dividend payout record. Despite the

+See More

President Trump remains optimistic about the Sino-American trade war resolution.

Monica McNeil

2019-02-05 10:32:00 Tuesday ET

President Trump remains optimistic about the Sino-American trade war resolution.

President Trump remains optimistic about the Sino-American trade war resolution of both trade deficit eradication and tech transfer enforcement. Trump now s

+See More

U.S. Treasury officially designates China a key currency manipulator in the broader context of Sino-American trade dispute resolution.

Becky Berkman

2019-09-15 14:35:00 Sunday ET

U.S. Treasury officially designates China a key currency manipulator in the broader context of Sino-American trade dispute resolution.

U.S. Treasury officially designates China a key currency manipulator in the broader context of Sino-American trade dispute resolution. The U.S. Treasury cla

+See More

We assess almost all aspects of the current global race toward artificial general intelligence (AGI) between both the U.S. and China.

Monica McNeil

2027-10-31 00:00:00 Sunday ET

We assess almost all aspects of the current global race toward artificial general intelligence (AGI) between both the U.S. and China.

In the technological race between the U.S. and China, America leads in some strategic sectors from AI large language models (LLM), graphics processing units

+See More

Better corporate governance through worldwide convergence toward Berle-Means stock ownership dispersion

Fiona Sydney

2023-12-05 09:25:00 Tuesday ET

Better corporate governance through worldwide convergence toward Berle-Means stock ownership dispersion

Better corporate ownership governance through worldwide convergence toward Berle-Means stock ownership dispersion   Abstract We design a model

+See More