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Monetary policy

  • Payment system design can encourage intraday liquidity efficiency

    Efficient allocation of bank reserves improves central bank balance sheet efficiency. Frictions in such redistribution can affect monetary policy implementation.

  • Central bank swaps offer dollar crisis lifeline to non-U.S. banks

    Starting in late 2007, the Federal Reserve, in partnership with a few major foreign central banks, began offering central bank dollar liquidity swap lines as an important liquidity backstop.

  • What is keeping core inflation above 2 percent?

    How much is current "excess" inflation? We take a new approach to this question, focusing on movements in relative prices.

  • Research Department Working Papers

    Pandemic and War Inflation: Lessons from the International Experience

    This paper examines the drivers of the 2020–23 inflation surge, with an emphasis on the similarities and differences across countries, as well as the role that monetary policy frameworks might have played in shaping central banks’ responses.

  • Bubble thought: What beliefs can reveal about housing market risks

    Survey-based forecast data on home price growth are a surer indicator of housing market exuberance than traditional valuation ratios, such as price-to-income or price-to-rent.

  • Falling rates no assurance of homeowner refinancing binge

    When the Fed lowers its benchmark policy rate, the reduction is usually reflected in a variety of consumer finance rates, notably mortgages. However, there are reasons to believe that such a reduction might not prompt an increase in the volume of mortgage refinances and prepayment activity as has historically occurred.

  • How sensitive are interest rates to higher federal debt?

    The U.S. faces a historically high federal debt-to-GDP ratio, a measure of debt relative to economic output. But how sensitive are interest rates to higher debt?

  • Accounting for interest rate risk: Matching Fed assets to liabilities

    In Depth: The Fed has floating-rate liabilities as well as long-lived, zero-interest liabilities. A barbell of floating-rate and long-duration assets would best offset the interest rate risk from these liabilities. Investing in a more diversified mix of durations, while matching the average duration of assets, could be more practical than the barbell approach but would leave a substantial portion of interest rate risk unhedged.

  • Research Department Working Papers

    A History of U.S. Tariffs: Quantifying Strategic Trade-Offs in Tariff Policy Design

    U.S. tariff policy has historically balanced competing goals—revenue, protection and reciprocity. Policy priorities have shifted over time in response to changing economic and political conditions. Using a calibrated general equilibrium model, this paper illustrates these trade-offs through the lens of tariff Laffer curves.

  • Research Department Working Papers

    An Asset-Liability Management Approach to the Federal Reserve Balance Sheet

    The Federal Reserve’s liabilities include a mix of floating-rate instruments, such as reserves, and long-duration, non-interest-bearing instruments, such as currency. This paper investigates the implications of an asset-liability management approach to choosing assets to back these liabilities, with a focus on matching the duration of assets and liabilities.