Reports

“Many central banks whose exchange rate regimes are classified as flexible are reluctant to let the exchange rate fluctuate. This phenomenon is known as “fear of floating”. We present a simple theory in which fear of floating emerges as an optimal policy outcome. The key feature of the model is an occasionally binding borrowing constraint…

“In sum, LMCI (Labor Market Conditions Indicators) momentum appears to be a leading indicator of how changes in monetary policy are affecting labor markets. Although many standard labor market variables do not begin to soften until months or even years after the end of a tightening cycle, LMCI momentum responds more quickly to monetary policy…

“After a long period of stable inflation and inflation expectations, the COVID-19 recovery and subsequent cost-push shocks produced a surge in global inflation not seen since the 1980s. Inflation expectations have also risen, and fears of de-anchoring have been cited as reasons to lift monetary policy rates. In this context, it is important to understand…

“Using employee-employer matched data with administrative tax information on all new employer startups in the U.S., we demonstrate that early joiners are critical drivers of startup performance. Unlike other rank-and-file employees who may be readily replaceable (e.g. second year joiners), early joiners tend to leave a lasting legacy on the performance of their nascent employers.…

“Total nonfarm payroll employment rose by 517,000 in January, and the unemployment rate changed little at 3.4 percent, the U.S. Bureau of Labor Statistics reported today. Job growth was widespread, led by gains in leisure and hospitality, professional and business services, and health care. Employment also increased in government, partially reflecting the return of workers…

“Our results suggest that the transition from credit-sensitive reference rates like LIBOR to risk-free reference rates such as SOFR is likely to increase expected borrowing costs on revolving lines of credit. This impact is smaller for banks with lower funding spreads, or even reversed if the deposit inflows that are anticipated under stressed market conditions…

“This easing of financial conditions during a central bank tightening cycle creates a conundrum for policymakers.” “On the one hand, financial markets are signaling that disinflation may occur without meaningful increases in unemployment. Policymakers could embrace that view, and in effect ratify the loosening of financial conditions. Many observers concerned that central banks will be…

“The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 4-1/2 to 4-3/4 percent. The Committee anticipates that ongoing increases in the target range will be appropriate…

“Who is right? This is where behavioral economics or psychology can come into play. Economic theory can tell us what the quickest, cheapest option is—targeting high-interest debt first regardless of the size of the bal­ance, as you would pay less interest overall. But it’s only the best solution if people stick to it. Personal finance…