The article argues that the Federal Reserve's recent rate hike decision, while justifiable on inflation grounds, highlights a critical lack of an underlying, transparent policy framework. The core problem is that the Fed's decisions appear discretionary, leading to market uncertainty because the committee's judgment, rather than clear data, dictates policy shifts. The author proposes that the Fed adopt a formal monetary policy rule—an algebraic formula linking the target rate to indicators like inflation and unemployment—to replace subjective guidance. Implementing such a rule would provide market predictability, enhance transparency, and shield the Fed from political attacks by making deviations from the standard easily quantifiable.
The Fed’s Defenses of Interest on Reserves Are Flawed
English Summary
CATO argues that the Federal Reserve's Interest on Reserves (IOR) framework is a flawed and 'dangerous' tool that distorts private lending and reduces Treasury remittances. The article refutes Fed claims that IOR is cost-neutral and necessary for interest rate control, highlighting significant recent operating losses and the destruction of the interbank lending market. To address these issues, the author recommends a gradual 10-to-15-year reduction of the Fed's balance sheet to restore a traditional corridor system. The findings suggest that Congress should implement serious monetary reforms rather than treating the Fed as an infallible institution.
中文摘要
卡托研究所（CATO）指出，聯準會（Fed）的準備金利息（IOR）框架是一項存在缺陷且「危險」的工具，扭曲了私人借貸並減少了上繳財政部的收益。文章反駁了聯準會聲稱 IOR 具備成本中性且為利率控制所必需的觀點，並強調了近期嚴重的營運虧損以及銀行同業拆借市場的破壞。為解決這些問題，作者建議在 10 至 15 年間逐步縮減聯準會的資產負債表，以恢復傳統的利率走廊制度。研究結果顯示，國會應推動嚴肅的貨幣改革，而非將聯準會視為無懈可擊的機構。
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