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Aug 23, 2024 | 
brookings.edu | Sam Boocker |David Wessel
The U.S. dollar is the world’s dominant currency. However, amid rising geopolitical fragmentation, conflicts over international trade and finance, and populist backlash against globalization in many Western democracies, there is persistent speculation that the dollar’s status is at risk. This post explains the role of the U.S. dollar in the global economy and the debate over its future. How is the dollar used abroad? Reserves.
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Jul 10, 2024 | 
brookings.edu | Sam Boocker |David Wessel
Later this year, the Federal Reserve plans to begin a review of the statement of longer-run goals and monetary policy strategy that it adopted in August 2020. In anticipation of that, the Hutchins Center on Fiscal & Monetary Policy at Brookings convened a conference in June 2024 to offer the Fed advice about what should be on the agenda for that review. The Fed has promised to review its “monetary policy strategy, tools, and communication,” the focus of the Brookings conference.
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Jul 8, 2024 | 
brookings.edu | Sam Boocker |David Wessel
A Carbon Border Adjustment Mechanism (CBAM) (also known as a Carbon Border Adjustment Tax, or CBAT) is a fee or tariff levied on imported goods based on the greenhouse gases emitted during their production. Such a policy can serve multiple purposes, such as reducing emissions to restrain climate change, preventing distortions between countries with differing emissions standards, and spurring domestic industries. This post explains how CBAMs work and the debate over CBAMs and their implementation.
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May 9, 2024 | 
brookings.edu | David Wessel |Sam Boocker
Fed watchers in academia and the private sector surveyed by the Hutchins Center on Fiscal & Monetary policy generally give the Federal Reserve high marks for its current communications. Some 81% of academics surveyed give the Fed an A, A-, or B+, and 54% of private sector Fed watchers do the same.
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Mar 18, 2024 | 
brookings.edu | Sam Boocker |Alexander N. Conner |David Wessel
After Russia invaded Ukraine in February 2022, Russia’s foreign exchange reserves held by the U.S. and its allies were frozen. Since then, some officials and commentators have proposed seizing those assets, which amount to nearly $300 billion, and using the proceeds to defend and rebuild Ukraine. Russian reserves could provide Ukrainians much-needed support as the war drags into its third year.
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Feb 2, 2024 | 
brookings.edu | Sam Boocker |David Wessel
Private credit (also known as direct lending) is generally defined as lending by non-bank financial institutions—including private equity firms and alternative asset managers—most often to small and mid-sized businesses, who are often highly leveraged and generally cannot borrow in corporate bond markets. For borrowers, it is an alternative to traditional bank loans.
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Sep 18, 2023 | 
brookings.edu | Sam Boocker |Michael Ng |David Wessel
The neutral rate of interest (also called the long-run equilibrium interest rate, the natural rate and, to insiders, r-star or r*) is the short-term interest rate that would prevail when the economy is at full employment and stable inflation: the rate at which monetary policy is neither contractionary nor expansionary. It is a function of the economy’s underlying characteristics and is not set by the Federal Reserve. It’s usually discussed in real terms, that is, with inflation subtracted out.
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Sep 14, 2023 | 
brookings.edu | Sam Boocker |David Wessel
What is the difference between a hard landing and soft landing? When the Federal Reserve is concerned about inflation, it raises interest rates to slow the pace of economic growth. If the Fed raises interest rates a lot, it may cause a recession – known as a hard landing. However, if the Fed can raise interest rates just enough to slow the economy and reduce inflation without causing a recession, it has achieved what is known as a soft landing. But there is no official definition of a soft landing.
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Jul 27, 2023 | 
brookings.edu | James Lee |Sam Boocker |David Wessel
The Federal Reserve’s primary tool for steering the economy is raising or lowering short-term interest rates. In recent years, however, the Fed and other central banks have embraced other tools, among them “forward guidance.” Forward guidance refers to central bank public communication about the likely future path of short-term interest rates, largely aimed at guiding financial markets. As Ben Bernanke, the former Fed chair, once quipped: Monetary policy is 98% talk and 2% action.
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Jul 13, 2023 | 
brookings.edu | Elijah Asdourian |Sam Boocker |Moraa Ogendi |Louise Sheiner
Elijah Asdourian, Elijah Asdourian Research Assistant - Economic Studies, The Hutchins Center on Fiscal and Monetary Policy Sam Boocker, Sam Boocker Research Analyst - Economic Studies, The Hutchins Center on Fiscal and Monetary Policy Moraa Ogendi, Moraa Ogendi Research Intern - Economic Studies, The Hutchins Center on Fiscal and Monetary Policy Louise Sheiner Louise Sheiner The Robert S. Kerr Senior Fellow - Economic Studies, Policy Director - The Hutchins Center on Fiscal and Monetary...
