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Showing posts with the label Monetary Policy

Fiscal and Monetary Policy Need to be Coordinated Globally

AT almost that three times the level reported in December, 2019, Friday's Black unemployment rate number is surprising and unfortunate, no matter what partisan policymakers and economists say.

Remember, our expectation (and hope) was that fiscal and monetary policy actions would limit the initial damage. The Paycheck Protection and Economic Injury Disaster Loan programs certainly helped keep May's unemployment rate below 20%, but the numbers show that more focused fiscal and monetary policy actions, coordinated on a global level, are needed.

In our comment on the Economic and Social Costs of "Reopening" America, we estimated that U.S. small businesses would need $6 trillion on an annual basis to ensure their survival through the coronavirus crisis. This was confirmed by the head of the Federal Reserve Bank of Atlanta. (See: https://twisri.blogspot.com/2020/04/economic-and-social-costs-of-reopening.html).

Unfortunately the unemployment numbers show that we are just b…

Can monetary policy really benefit minority groups in the U.S.? Chenyue Zhu, Impact Investing Intern, Georgetown University

Facing the global challenge of the COVID-19 pandemic and the declining stock market, the Federal Reserve made a bold move to reduce the fed funds rate to zero, trying to boost the economy as a whole.

However, it is uncertain whether minority groups will benefit from this policy. According to a report by the Fed, significant gaps exist between races and ethnicities in terms of interest rate on mortgages, and these differences vary geographically by State.

The government usually makes up those gaps through mortgage lending programs designed specifically for the disadvantaged. However, the country shows no sign of putting forward any targeted monetary policy corresponding to the changing interest rate.

Thus, people suspect that the current monetary policy will leave minority groups behind. In fact, according to Brookings Institution, Black businesses have long been undervalued, and their potential has yet to be developed.

To reverse the declining market economy, the U.S. government shou…

Trump's Tariffs on China will Mainly Hurt the Fed by Hongcheng Chen, Creative Investment Research

The Federal Reserve’s Federal Open Market Committee (FOMC) meeting statement on March 21, indicated that the Committee voted for a quarter-point increase in federal fund rate. (See: http://twisri.blogspot.com/2018/03/probability-of-fed-rate-hike-in-march.html)

The Fedseemedtosignal,bythisratehike,that a more robust economicoutlook, strengthened, at least in part,duetofiscalpolicy (tax bill), provides asolidbase on which totighten (increase interest rates) monetarypolicymoreaggressivelyinthefuture. The FOMC