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 Large Balance Sheet Is Costly Regardless of What the Fed Claims
English Summary
CATO’s analysis argues that the Federal Reserve’s large balance sheet, regardless of claims to the contrary, carries significant and ongoing costs. The core argument is that proponents, like Dallas Fed President Lorie Logan and Fed Governor Chris Waller, justify maintaining the current system by citing complexities arising from post-GFC regulations and fiscal flows, effectively blaming external factors for the Fed’s own policy choices. Specifically, the argument that the Fed’s marginal cost of supplying reserves is small is misleading, ignoring the broader economic consequences of artificially maintaining low interest rates and the impact of IOR on bank behavior. Reducing the balance sheet and ending IOR payments are therefore critical policy reforms to restore a clear separation between monetary and fiscal policy and mitigate these financial burdens.
中文摘要
CATO 的分析認為，聯邦準備銀行龐大的資產負債表，無論其否認聲明如何，都帶來了顯著且持續的成本。核心論點是，像達拉斯聯邦準備銀行主席 Lorie Logan 和聯邦準備銀行官員 Chris Waller 這樣的支持者，藉由引用因金融海嘯後（GFC）的法規和財政流動所產生的複雜性來合理化維持現狀，實際上將外部因素歸咎於聯邦準備銀行的政策選擇。 尤其，聲稱聯邦準備銀行提供儲備的邊際成本微乎其微的論點，忽略了維持低利率所帶來的更廣泛的經濟後果，以及 IOR（儲備金機構）對銀行行為的影響。 因此，縮減資產負債表並停止 IOR 支付，是恢復貨幣與財政政策之間明確分界線，並減輕這些財政負擔的關鍵政策改革。
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