© 1982-2022 MNI. All rights reserved.
Terms | Privacy
Log Out
Free Trial
US TSYS

What Recession?

US TSYS

Eurodollar/SOFR/ Tsy Options Roundup

PIPELINE

Corporate Issuance Over $60B/Wk

Real-time Actionable Insight

Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.

Free Access
Trending Top 5
Topics

Rules Call For 4+% Rates: MonPol Report To Congress

FED
Fixed IncomeBulletMarketsEmerging MarketsForeign Exchange

Simple monetary policy rules called for a fed funds rate in the 4% to 7% range in the first quarter of 2022 and have risen since then as inflation climbed, the Federal Reserve said in its semiannual Monetary Policy report to Congress.

  • As noted by our Policy team, the Fed also cautioned that the usefulness of these rules are "limited in unusual economic circumstances" and don't take into account the effect of balance sheet tightening.
  • "The recent elevated inflation readings imply that the prescriptions for the federal funds rate of simple policy rules in the first quarter of 2022 are well above their pre-pandemic levels, at between 4% and 7%. Overall, the prescriptions of all simple rules have risen notably over the past few quarters as inflation readings climbed further above 2%."
  • This study won't sway current Fed policy, but it does underline that the FOMC still has plenty of room to go before policy begins to look restrictive.

Source: Federal Reserve

172 words

To read the full story

Why Subscribe to

MarketNews.com

MNI is the leading provider

of news and intelligence specifically for the Global Foreign Exchange and Fixed Income Markets, providing timely, relevant, and critical insight for market professionals and those who want to make informed investment decisions. We offer not simply news, but news analysis, linking breaking news to the effects on capital markets. Our exclusive information and intelligence moves markets.

Our credibility

for delivering mission-critical information has been built over three decades. The quality and experience of MNI's team of analysts and reporters across America, Asia and Europe truly sets us apart. Our Markets team includes former fixed-income specialists, currency traders, economists and strategists, who are able to combine expertise on macro economics, financial markets, and political risk to give a comprehensive and holistic insight on global markets.

Simple monetary policy rules called for a fed funds rate in the 4% to 7% range in the first quarter of 2022 and have risen since then as inflation climbed, the Federal Reserve said in its semiannual Monetary Policy report to Congress.

  • As noted by our Policy team, the Fed also cautioned that the usefulness of these rules are "limited in unusual economic circumstances" and don't take into account the effect of balance sheet tightening.
  • "The recent elevated inflation readings imply that the prescriptions for the federal funds rate of simple policy rules in the first quarter of 2022 are well above their pre-pandemic levels, at between 4% and 7%. Overall, the prescriptions of all simple rules have risen notably over the past few quarters as inflation readings climbed further above 2%."
  • This study won't sway current Fed policy, but it does underline that the FOMC still has plenty of room to go before policy begins to look restrictive.

Source: Federal Reserve