Economic Research and Data

Money, Financial Markets, and Monetary Policy

Features

03.25.08
Down Another Seventy-Five

On March 18, 2008, the Federal Open Market Committee (FOMC) voted to lower its target for the federal funds rate by 75 basis points to 2.25 percent.. continue reading...

Trends

  • 03.20.08
    What is the Yield Curve Telling Us?. An update of what an analysis of the the yield curve predicts for future economic growth and the chance of a recession.
  • 02.20.08
    What is the Yield Curve Telling Us?. An update of what an analysis of the the yield curve predicts for future economic growth and the chance of a recession.
  • 01.31.08
    Another Move, but with Less Surprise. At its scheduled meeting yesterday, the Federal Open Market Committee (FOMC) lowered its target for the federal funds rate 50 basis points to 3 percent. Yesterday's decision followed just nine days after the January 21 decision to lower the target 75 basis points to 3.4 percent.
  • 01.30.08
    What Is the Yield Curve Telling Us?. An update of what an analysis of the the yield curve predicts for future economic growth and the chance of a recession.
  • 01.14.08
    The New Term Auction Facility. On December 12, 2007, the Federal Reserve announced the creation of a Term Auction Facility (TAF). The TAF provides a new means by which the Federal Reserve can inject liquidity into the banking system.Two auctions for a total of $40 billion have been conducted so far. Bids for the first auction of $20 billion began December 17, with a minimum bid rate of 4.17 percent.
  • 12.04.07
    Inflation Expectations. Inflation expectations, despite their importance, are notoriously difficult to measure. Many economists have looked to the TIPS market to get a truer sense of what markets are expecting inflation to be. Two measures derived from this market suggest that inflation expectations may have crept up recently
  • 11.20.07
    What Is the Yield Curve Telling Us? An update of what an analysis of the the yield curve predicts for future economic growth and the chance of a recession.
  • 11.07.07
    Financial Markets: Settling but CautiousCredit markets have settled a great deal since late summer, when it became starkly apparent that subprime mortgages were much riskier than had been previously thought.
  • 10.31.07
    The Well-Anticipated Rate Cut The Federal Open Market Committee voted today to lower the fed funds target 25 basis points to 4.50 percent. One FOMC member dissented. The immediate reaction to the statement was largely negative. Equity prices fell, erasing gains on the day. Within minutes, however, market sentiment turned favorable and equity prices rose to new highs on the day.
  • 10.31.07
    What Is the Yield Curve Telling Us? An update of what an analysis of the the yield curve predicts for future economic growth and the chance of a recession.
  • 09.19.07
    What Is the Yield Curve Telling Us? An update of what an analysis of the the yield curve predicts for future economic growth and the chance of a recession.
  • 08.08.07
    A Step Toward Neutral. While the committee did not change rates, it changed the postmeeting statement to acknowledge that “Financial markets have been volatile in recent weeks, credit conditions have become tighter for some households and businesses, and the housing correction is ongoing.”
  • 07.11.07
    Assessing New Information: What’s Permanent, What’s Not?
    New information often does not affect the outlook enough to warrant a policy action.

Related Research

Commentary

  • Inflation, Inflation Expectations, and Monetary Policy. Careful readers of FOMC communications will note that in addition to talking about actual inflation, the committee often talks about inflation expectations. Sandra Pianalto, the president and chief executive officer of the Federal Reserve Bank of Cleveland, explains the important role that inflation expectations play in the monetary policy process.
  • Central Bank Credibility. The Federal Reserve System has worked hard over the past few decades not only to lower inflation and keep it low, but also to convince the public that it is dedicated to delivering low inflation over the long haul. This Commentaryexplains why credibility is so important to monetary policymakers.
  • Economic Conditions and Monetary Policy. In order to set monetary policy appropriately, policymakers need to assess current economic conditions, understand how the economy got to where it is, and have a good idea of where it is heading. Because economic conditions are always in flux, good communications are important to successful policymaking. Communications can help the public appreciate policymakers’ objectives, understand their thinking about the prospects for meeting those objectives, and consider how new information might affect policy choices.
  • FOMC Communications and the Predictability of Near-Term Policy Decisions. In February 1994, the FOMC began a new era in transparency, gradually building a communications apparatus that conveys information about the Committee’s decisions and expectations. Has the new apparatus improved the public’s ability to predict FOMC interest rate decisions? New research based on the prices of fed funds futures shows that over the past decade, it has, especially over horizons of two to three months.
  • Inflation, Banking, and Economic Growth. The world has seen a dramatic decline in inflation rates in recent decades, but concerns about inflation may still be warranted, especially in some countries. Evidence is mounting that inflation is harmful to economic activity even at fairly modest rates of inflation because of the way it adversely affects the banking sector and investment.
  • Monetary Policy in an Interdependent World. While central bankers must focus on delivering price stability and other mandates in their own countries, they must also monitor international developments closely because national trade and financial markets have become increasingly interconnected.
  • Does the Yield Curve Signal Recession? Experience has taught economic forecasters to expect a recession when the yield on short-term Treasury securities rises above the yield on longer-term securities—a situation known as a yield-curve inversion. But some economists suspect the yield curve might not be as reliable a predictor of output growth as it used to be.