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

The Internet and telecom conglomerate SoftBank Group raises $23 billion in the biggest IPO in Japan.

Chanel Holden

2018-12-21 11:39:00 Friday ET

The Internet and telecom conglomerate SoftBank Group raises $23 billion in the biggest IPO in Japan.

The Internet and telecom conglomerate SoftBank Group raises $23 billion in the biggest IPO in Japan. Going public is part of the major corporate move away f

+See More

E.U. antitrust regulators impose a fine on Qualcomm for advancing its exclusive microchip deal with Apple.

Fiona Sydney

2018-01-17 05:30:00 Wednesday ET

E.U. antitrust regulators impose a fine on Qualcomm for advancing its exclusive microchip deal with Apple.

European Union antitrust regulators impose a fine on Qualcomm for advancing its key exclusive microchip deal with Apple to block out rivals such as Intel an

+See More

Facebook, Twitter, and Google executives explain the scope of Russian interference in the U.S. 2016 presidential election.

Apple Boston

2017-09-19 05:34:00 Tuesday ET

Facebook, Twitter, and Google executives explain the scope of Russian interference in the U.S. 2016 presidential election.

Facebook, Twitter, and Google executives head before the Senate Judiciary Committee to explain the scope of Russian interference in the U.S. presidential el

+See More

AYA Analytica podcast provides fresh insights into the latest stock market news, economic trends, and investment portfolio strategies.

Amy Hamilton

2019-04-30 19:46:00 Tuesday ET

AYA Analytica podcast provides fresh insights into the latest stock market news, economic trends, and investment portfolio strategies.

AYA Analytica finbuzz podcast channel on YouTube April 2019 In this podcast, we discuss several topical issues as of April 2019: (1) Our proprietary

+See More

Lyft seeks to go public with a dual-class stock ownership structure that allows the co-founders to retain significant influence.

Amy Hamilton

2019-03-11 10:32:00 Monday ET

Lyft seeks to go public with a dual-class stock ownership structure that allows the co-founders to retain significant influence.

Lyft seeks to go public with a dual-class stock ownership structure that allows the co-founders to retain significant influence over the rideshare tech unic

+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