In principle, providing scenarios would be a step forward, but...
A) a CB should have a policy to have a narrative. For over a year both the Fed and the ECB have been repeating ad nauseam they are data driven. Let me translate: clueless.
From the transitory mantra on, the show has been despicable
B) It is a complex world. Having lawyers manage monetary policy is nothing less than masochistic. Did you hear any Powell'd press conference? The sense of void is overbearing. The guy has one of the most important jobs in the world and is unfit. Just in case the detail was overlooked, the temporary thing was buying time while he was being confirmed by Biden
He did not want to do anything that could have threatened his confirmation. Good luck explaining that in a scenario
C) is there any agreement on the neutral rate? Nope, sorry.
D) inflation itself should be redefined. If profits drive the stock price increases, it is fine. When multiples explode and get to the same outcome, it is inflationary
If real estate prices grow 30 to 40% in two years, it is inflationary.
We should stop claiming the increasing asset prices are good and the increasing labor costs bad. It is just people trying to buy a home.
It is discriminatory and leads to all the turmoil we are witnessing in the Western world
Thanks for your comment. In principle, scenario analysis does require an understanding of what is happening and how the economy and monetary policy work. I agree that the recent record of Central Banking proves this challenging. The post-pandemic world is more complex and there is a need for more focus on these new concrete challenges. The Fed has shifted from the importance of financial conditions to the emphasis on supercore inflation, the vacancy to unemployment ratio, and now most likely back to inflation. The concept of r* also assumes an implicit consensus on how the monetary policy works which is implicitly what you are questioning in your point D. There is a lot I agree on in the last part and in particular wage dynamics that I was planning to cover ahead of the BoE next week.
In principle, providing scenarios would be a step forward, but...
A) a CB should have a policy to have a narrative. For over a year both the Fed and the ECB have been repeating ad nauseam they are data driven. Let me translate: clueless.
From the transitory mantra on, the show has been despicable
B) It is a complex world. Having lawyers manage monetary policy is nothing less than masochistic. Did you hear any Powell'd press conference? The sense of void is overbearing. The guy has one of the most important jobs in the world and is unfit. Just in case the detail was overlooked, the temporary thing was buying time while he was being confirmed by Biden
He did not want to do anything that could have threatened his confirmation. Good luck explaining that in a scenario
C) is there any agreement on the neutral rate? Nope, sorry.
D) inflation itself should be redefined. If profits drive the stock price increases, it is fine. When multiples explode and get to the same outcome, it is inflationary
If real estate prices grow 30 to 40% in two years, it is inflationary.
We should stop claiming the increasing asset prices are good and the increasing labor costs bad. It is just people trying to buy a home.
It is discriminatory and leads to all the turmoil we are witnessing in the Western world
Thanks for your comment. In principle, scenario analysis does require an understanding of what is happening and how the economy and monetary policy work. I agree that the recent record of Central Banking proves this challenging. The post-pandemic world is more complex and there is a need for more focus on these new concrete challenges. The Fed has shifted from the importance of financial conditions to the emphasis on supercore inflation, the vacancy to unemployment ratio, and now most likely back to inflation. The concept of r* also assumes an implicit consensus on how the monetary policy works which is implicitly what you are questioning in your point D. There is a lot I agree on in the last part and in particular wage dynamics that I was planning to cover ahead of the BoE next week.