The Federal Open Market Committee decided today to lower its target for the federal funds rate 25 basis points to 2 percent.
Read more
Federal Reserve Conference Focuses on Economic Development
Why are some cities thriving while others are not? More than 140 civic and business leaders, researchers, educators, and economic development professionals grappled with that question at The Economics of Geography: Cities, Growth, and Economic Development, a conference hosted by the Federal Reserve Bank of Cleveland on April 3-4, 2008.
Read more
Federal Reserve Banks Announce Restructuring Schedule Changes as Electronic Check Processing Continues to Accelerate
The Federal Reserve Banks announced modifications to the schedule for previously announced check processing infrastructure changes as consumers and businesses continue the shift from using paper checks toward electronic payments and as financial institutions rapidly adopt electronic check processing.
Read more
President Pianalto Discusses Current Events in the Economy, Financial Markets
In a speech to the R.I.S.E. Global Student Investment Forum at the University of Dayton, President Pianalto provides some context for the current financial market turmoil and explains why and how the Federal Reserve has been responding to the situation.
Read more
Federal Reserve Board Statement
The Federal Reserve announced two initiatives designed to bolster market liquidity and promote orderly market functioning.
Read more
The International Monetary Fund lowered its projections for world economic growth. No surprise there! But, the report also suggested that the traditional correlation between growth in advanced-developed countries and growth in developing countries was weakening. Global trade gains and macroeconomic policy improvements have reduced?but not eliminated?the developing countries? dependency on the developed world. Now that?s interesting!
Read more
The Employment Situation
Beth Mowry and Michael Shenk
The April Employment Report came in better than anticipated, with a total loss of just 20,000 nonfarm jobs from payrolls. Revisions to February and March numbers increased the losses in those months by just 8,000. The unemployment rate edged slightly lower, from 5.1 percent to 5.0 percent over the month.
Read more
Real GDP 2008:Q1 Advance Estimate
Brent Meyer
Real GDP grew at an annualized rate of 0.6 percent in the first quarter of 2008, the same growth rate as last quarter, according to the advance release by the BEA. Over the past four quarters, real GDP has increased 2.5 percent, slightly below its long term (30-year) average of 3.0 percent. Growth in the first quarter was primarily due to increases in exports and private inventories, which were partly offset by a decrease in private investment and an increase in imports (which subtract from real GDP).
Read more
Supplying Liquidity: The Tried and True and the New
Bruce A Champ and Sarah Wakefield
With the onset of financial turmoil in the fall of 2007, the Federal Reserve has implemented a number of facilities to enhance market liquidity and the functioning of financial markets. Despite the new liquidity-providing facilities, measures of liquidity pressures remain elevated. On April 30, 2008, the Federal Open Market Committee (FOMC) voted to lower its target for the federal funds rate by 25 basis points to 2 percent. Since this latest round of rate cuts began in September 2007, the federal funds rate has been lowered a total of 3.25 percent.
Read more
March Price Statistics
Brent Meyer
The Consumer Price Index (CPI) rose at an annualized rate of 4.2 percent in March, returning to its recent elevated trend after a respite in February, when it increased only 0.3 percent (annualized rate). The CPI is up 4.6 percent over the past six months.
Read more
What Interest Rate Spreads Can Tell Us about Mortgage Markets
Andrea Pescatori and Beth Mowry
The target for the federal funds rate has been slashed three full percentage points since September, from 5.25 to 2.25 percent. Yet the average interest rate on 30-year fixed-rate mortgages has fallen only about half a percentage point—from about 6.4 to about 5.9 percent—over the same time span. Why has the central bank’s aggressive action had such a small impact on these mortgage rates, and what does this mean?
Read more
Mortgage Delinquencies in Fourth District Metropolitan Areas
Guhan Venkatu and Timothy Dunne
The U.S. housing market continued to be under considerable stress in the first quarter of 2008. Recent data show that building permits and housing starts are still falling, and mortgage delinquency rates rose again in the first quarter.
Read more
Cleveland Fed Hosts Research Seminar on Financial Education
Financial literacy levels are alarmingly low across many segments of the U.S. population, with knowledge deficits evident in groups ranging from individuals with little formal education to high school seniors and teachers. That was the assessment of some of the nation’s leading scholars on financial literacy who gathered April 25 at the 2008 Research Seminar on Financial Education, hosted by the Federal Reserve Bank of Cleveland at its Cincinnati branch. In all, the event provided an eye-opening perspective on American’s financial savvy and on the effectiveness of financial education programs in general.
Read more
Explaining Apparent Changes in the Phillips Curve: The Great Moderation and Monetary Policy
Charles T Carlstrom and Timothy S Fuerst
Observations that the Phillips curve may be deviating from historical norms are important to policymakers because deviations would imply that more or less output has to be sacrificed to achieve a permanent reduction in long-term inflation. But we argue that recent economic shocks and a shift in the Fed’s response to inflation may be leading economists to misestimate the curve.
Read more
Explaining Apparent Changes in the Phillips Curve: Trend Inflation Isn't Constant
Charles T Carlstrom and Timothy S Fuerst
Monetary policymakers look to the Phillips curve—an expression of the relationship between inflation and the degree to which the economy is operating relative to its potential—for information about the cost of actions undertaken to lower inflation. Recent estimations of the curve suggest it is deviating from historical norms. We argue that changes in trend inflation and Fed operating procedures are not being taken into account in these estimations and that when they are, changes in the curve are minor and need not concern policymakers.
Read more
Great
Minds Think: 
