, Columnist
What the Federal Funds Rate Isn’t Telling You
Broader financial conditions matter for the economic outlook. The Fed is right to focus on them.
What they do matters for monetary policy.
Photographer: Michael Nagle/BloombergThis article is for subscribers only.
Lately, Federal Reserve officials have been paying greater attention to financial conditions – that is, to the influence that market phenomena such as stock prices, bond yields and housing prices have on economic activity, above and beyond the effect of the short-term interest rates that the central bank controls directly.
This is a welcome development for monetary policy — and for me personally.