Financier and lawyer Kevin Warsh was confirmed as chair of the Federal Reserve by the U.S. Senate on May 13 and officially took his position on May 15. The Fed’s dual mandate from Congress is promoting maximum employment and stable prices (i.e., controlling inflation). Warsh’s first meeting of the Federal Open Market Committee (FOMC), the Read more
Federal Reserve Policy
Economic Outlook: Fallout from the Iran War
Markets continue to react to minute-by-minute developments regarding the ongoing U.S./Israeli war with Iran, which has effectively closed the Strait of Hormuz, narrow, strategic waterway in the Persian Gulf through which roughly 20% of the world’s oil and liquid natural gas pass, as well as affecting the global supply of helium, fertilizer, and aluminum. The Read more
Horns of a Dilemma: Is Stagflation on Its Way?
As the effect of the Trump administration’s fluctuating tariff policies have heightened uncertainty for consumers and the markets, economists have begun to worry about the looming risk of stagflation, an economic condition not seen in the United States since the 1970s. Though the U.S. economy is still in a “strong position” according to the Federal Read more
What’s the Meaning of This? The Fed Finally Cuts Rates
After many months of punditry and prognostication regarding the potential for the Federal Reserve to cut the federal funds rate in 2024, the agency finally did so at its September 17-18 meeting. The Fed lowered the target for the rate by 0.50%, or 50 basis points, to a range of 4.75% to 5.0%. This amount Read more
Dueling Surveys: What’s the Real Employment Story?
The Federal Reserve’s modern statutory mandate, as described in the 1977 amendment to the Federal Reserve Act, is to promote maximum employment and stable prices. These goals are commonly referred to as the dual mandate. High levels of employment are key to a vibrant economy. Maximum employment promotes business investment, thus boosting productivity and the economy’s Read more
A Shear Guessing Game: Will the Fed Cut Rates?
The Federal Reserve’s battle against inflation had gone better than expected until it recently got bogged down. Thus, the effort to combat inflation can’t be called a victory just yet. Though the initial predictions for Fed rate cuts for 2024 ranged from three to six, expectations have shifted dramatically with the market now pricing in Read more