monetary policy

Link Between Inflation & Output Gap

By
By

The output gap is the highest since the 1970s suggesting that inflation should be significantly increasing in the coming years. However, can the two indicators both be correct, with there being subdued inflation as measured currently and with the economy above its potential?

CONTINUE READING

The Bearish Cases For Equities In 2018

By
By

In this article we will be reviewing some of the bearish cases for equities since they have overcome the correction earlier in the year and are now near record highs once again. The Nasdaq and the Russell 2000 already beat their January highs, but the S&P 500 and the Wilshire…CONTINUE READING

Central Bank Policy Changes This Week

By
By

In this article we will update you on central bank policy, specifically from the Bank of Japan and the U.S. Federal Reserve. We take a practical data focused approach to analyzing monetary policy. Our only goal is the pursuit of truth and to have the appropriate perspective of the past,…CONTINUE READING

What Amount of Inflation Is Good?

By
By

The way you interpret the economic data released in the PCE and ECI reports depends on if you fear inflation or an economic slowdown more. It’s not an easy decision to make because on the one hand, the labor market is tightening and the cycle is probably near its end.…CONTINUE READING

Monetary Policy Doesn’t Follow GDP

By
By

The Fed funds rate is a hotly debated topic because it’s the main policy tool the Fed uses. There is economic data which can be interpreted to support every argument. Furthermore, after the metrics are taken into account, the goals are subject to interpretation. Just because the core inflation rate…CONTINUE READING

Tax Cuts: Short-Term & Long-Term Review

By
By

Throughout the expansion from about 2010 to 2016 the Federal Reserve told us it wanted to step back from its stimulative policies, which were QE and zero percent interest rates, but it couldn’t because fiscal stimulus wasn’t coming. Furthermore, there have been times in that period where fiscal policy hurt…CONTINUE READING

How The Federal Reserve Decides Policy

By
By

The Federal Reserve has a dual mandate to form an economic environment which keeps prices stable and has maximum stable employment. The Dual Mandate Bullseye chart does a great job of showing the policy objective the Fed has. As you can see, the x axis has an unemployment gauge and the…CONTINUE READING