Monetary Policy | Econofact

Understanding the Low Inflation and Low Unemployment in Today’s Economy (VIDEO)

By Megan Greene and Michael Klein·October 21, 2019
Harvard Kennedy School, and The Fletcher School, Tufts University

This conversation was recorded on August 1, 2019.

The U.S. economy is in its longest expansion on record. As unemployment touches historic lows, a striking feature of this expansion is that contrary to what economic theory would predict, inflation too remains strangely low. Megan Greene (Harvard) and Michael Klein,

Why Is Inflation so Low?

By Dan Sichel·October 8, 2019
Wellesley College

The Issue:

Inflation has averaged just over 1-1/2 percent over the past decade, well below the Federal Reserve’s target of 2 percent. Such low inflation for such an extended stretch is quite unusual given historical economic relationships. With the current unemployment rate near historic lows, the persistent soft

How Low Can We Go? Prospects for Negative Interest Rates

By Kenneth Kuttner·September 17, 2019
Williams College

The Issue:

There is increasing speculation regarding whether the Federal Reserve might set a negative target for the federal funds rate should the economy enter a recession. If it did, the Fed would not be the first central bank to do so. Although negative policy rates have been rare until recently, the European

Fed Policy: Is it Time to Take Away the Punch Bowl? (UPDATE)

By Kenneth Kuttner·July 30, 2019
Williams College

The Issue:

The Federal Reserve kept interest rates low (and took extraordinary expansionary actions) in response to the financial and economic crisis that began in the autumn of 2008. Beginning in December 2015, as the recovery gained traction, the Fed began gradually raising the federal funds rate, the interest

What Tools Does the U.S. Have to Combat the Next Recession? (VIDEO)

By Karen Dynan and Jay C. Shambaugh·December 12, 2018
Harvard University and George Washington University and The Hamilton Project, Brookings Institution

Excerpt from webinar with Karen Dynan (Harvard University), Jay Shambaugh (George Washington University, and The Hamilton Project at The Brookings Institution), and Eduardo Porter (New York Times), October 23, 2018. A collaboration between EconoFact and The Hamilton Project, Brookings.

The Issue:

U.S. fiscal ...
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What Information Does the Yield Curve Yield? (UPDATED)

By Michael Klein·December 6, 2018
Fletcher School, Tufts University

The Issue:

Forecasting the twists and turns of the economy is difficult. One set of indicators used to gauge where the economy is headed draws on information from financial markets since the yields paid by financial assets reflect the collective market view of the future state of the economy. An inverted yield ...
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What’s the Problem with Low Inflation?

By Michael Klein·August 6, 2017
Fletcher School, Tufts University

The Issue:

Today's low inflation has some economists puzzled. The Federal Reserve has persistently undershot its inflation target of 2 percent since 2012, when it established this level of inflation as one of its policy goals. Modest inflation has a number of benefits, and some concerns have been raised by the persistence ...
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Leaning on The Fed

By Michael Klein·April 13, 2017
Fletcher School, Tufts University

The Issue:

The Federal Reserve walks a tight balance between maintaining low unemployment and preventing the economy from heating up and unleashing inflation. Its decisions impact groups differently: raising interest rates can be painful for borrowers and businesses seeking to invest and expand; lowering them can ...
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