The President of the Federal Reserve Bank of St. Louis, James Bullard, posted a very clear analysis of this question, addressing whether the Federal Reserve had raised the federal funds interest rate enough. The title of his analysis is what I used to title this blog. His analysis is based primarily on the Taylor Rule. He concludes that the federal funds rate is just barely high enough: https://www.stlouisfed.org/publications/regional-economist/2023/june/is-monetary-policy-sufficiently-restrictive. I recommend this piece. It refers to the paper he gave at the annual monetary Policy Conference ..read more

We just reached a big anniversary:  “Economic Policy Working Group Reaches 15-Year Milestone in Providing Rigorous Policy Analysis and Solutions for American Prosperity,” as the Hoover Daily Report headlined in a just-published article. Here is the article https://www.hoover.org/news/economic-policy-working-group-reaches-15-year-milestone. It provides a beautiful summary of the people, seminars, working papers, and, of course, the books. And the “Rigorous Policy Analysis” and the “Solutions for American Prosperity” are key, and we have always emphasized the international benefits to the w ..read more

Informative NPR interview and discussion with me https://www.npr.org/2022/11/02/1133720724/john-taylors-formula-for-the-fed conducted by Darian Woods and Mary Childs on the Fed’s decision to raise rates and the Taylor Rule. Good questions and good answers with excerpts from Jay Powell and Janet Yellen. Here is the https://www.npr.org/transcripts/1133720724 ..read more

The book is entitled HOW MONETAY POLICY GOT BEHIND THE CURVE — AND HOW TO GET BACK and is based on conference held on May 6. The conference is described here: https://economicsone.com/2022/05/08/monetary-policy-got-behind-the-curve-how-to-get-back/ The book on the conference has many insightful papers, great commentary, and excellent press coverage. Current and former Federal Open Market Committee Members gave critical assessments and debated with Fed watchers from the markets and academics ..read more

Good in-depth interview on Bloomberg’s Triple Take with me fielding terrific questions from Caroline Hyde, Taylor Riggs, & Sonali Basak about Taylor Rule, Fed’s being behind curve, and how to get back. Video ointerview is here from 0.25 to 13.05 minutes: https://www.bloomberg.com/news/videos/2022-09-01/bloomberg-markets-triple-take-09-01-2022?in_source=video-show_5_play-episode ..read more

The stock market reaction to the Kansas City Fed meeting in Jackson Hole today was not so pleasant. The Dow Jones Industrial Average was down over 1,000 points or by over 3 %. The S&P 500 was down 3.4 percent. The markets started to fall with Chairman Powell’s speech in which he said “We must keep at it until the job is done,” and he emphasized credibility almost as if in a full policy rule-like mode. But the emphasis of the market commentary was not much on the benefits of credibility of monetary policy. Rather it was that the Fed will simply keep raising the federal funds rate until ..read more

A beautiful book, edited by Robert King and Alexander Wolman, https://www.richmondfed.org/-/media/RichmondFedOrg/publications/research/goodfriend/essays_marvin_goodfriend.pdf with original essays in tribute by Alfred Broaddus Jr., Donald Kohn, William Poole, Kartik Athreya and Stephen Williamson, Ben Bernanke, Michael Bordo and Edward Prescott, Douglas Diamond, Michael Dotsey, Andreas Hornstein, and Alexander Wolman, Huberto Ennis and John Weinberg, Vitor Gaspar and Frank Smets, Mark Gertler, Robert Hetzel, Athanasios Orphanides and John Williams, Charles Plosser, Sergio Rebelo and Pierre-Dani ..read more

Federal Reserve Chair Jerome Powell’s testimony at the House and Senate this week again had much to say about monetary policy rules. The focus on policy rules is encouraging, as it is a way to both get back on track and prevent further harmful deviations in the future, as was the focus of our recent May conference at Hoover and Stanford University Consider for example the exchange at the Senate Committee on Banking. Housing and Urban Affairs between North Carolina Senator Thom Tillis, the acting ranking member, and Chair Powel on Wednesday June 22.  According to the written record of his ..read more

Last March, I quoted Federal Reserve Chair Jerome Powell on this Economics One blog post https://economicsone.com/2022/03/03/well-have-it-in-the-next-one-well-bring-them-back-for-the-july-said-chair-powell-at-the-house-yesterday-and-at-the-senate-today/  from his March 2 and March 3 testimony at the House and Senate that “WE’LL HAVE IT IN THE NEXT ONE.”  He was responding to questions at hearings of the House Financial Services Committee on March 2 and of the Senate Banking Committee on March 3,  about why he and the Federal Reserve Board omitted the section on monetary policy r ..read more

On Friday May 6, we held our annual Monetary Policy Conference at the Hoover Institution at Stanford. This year it was entitled: “How Monetary Policy Got Behind the Curve and How to Get Back,” and the title turned out to describe the theme of the conference, the papers presented, and the discussion from the audience remarkably well.   Michael Bordo, John Cochrane and I organized the conference. Condoleezza Rice, Director of the Hoover Institution and former Secretary of State, gave the motivating opening remarks, mentioning monetary policy rules and bringing in the complicating facto ..read more