For much of the past 17 years the Federal Reserve has been the central player in US economic policy, throwing multi-trillion-dollar safety nets under the financial system, offering nearly a decade of ultra-cheap money, jumping redlines during the COVID-19 pandemic, and delving more into areas like equity and climate change.
But that expansive role has now shrunk to one of terse policy statements, a meat-and-potatoes debate over interest rates, a declining stash of bonds, and a growing possibility that Fed Chair Jerome Powell may be remembered both as the man who got the US through the economic crisis triggered by the pandemic and the one who made central banking boring again.
James Bullard, the former president of the St. Louis Fed, was a member of the policymaking team that witnessed the expansion of the central bank’s function during the financial crisis of 2007–2009, its resurgence during the pandemic, and its current transformation back into a more conventional position.
Recently, “we had to go back to kind of heavy-duty inflation fighting that is reminiscent of the old days when you did not worry about the zero lower bound, you did not worry about balance sheet policy,” Bullard stated. In that regard, it is somewhat generic. The times have evolved. Bullard, who is currently Purdue University’s dean of the Mitch Daniels School of Business, will launch a symposium in Washington on Monday regarding the Fed’s monetary policy framework and its strategy for achieving its mandate to foster price stability and maximum employment.
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