The Federal Reserve has dominated US economic policy for a large portion of the last 17 years, launching redlines during the COVID-19 pandemic, offering nearly ten years of ultra-cheap money, throwing multi-trillion-dollar safety nets under the financial system, and expanding into areas like equity and climate change.
However, that broad role has now been reduced to one of brief policy statements, a meat-and-potatoes argument over interest rates, decreasing bond holdings, and the growing likelihood that Fed Chair Jerome Powell will be remembered as both the person who helped the US weather the pandemic-induced economic crisis and the person who made central banking boring once more.
James Bullard, the former president of the St. Louis Fed, was part of the policymaking team that saw the central bank’s role grow during the 2007–2009 financial crisis, recover during the pandemic, and now return to a more traditional status.
Since our team had to go back to kind of heavy-duty price fighting that is typical of the old days when you did not worry about the lower bound of zero and you did not worry about financial policy, Bullard explained. It is somewhat universal in that sense. Time has changed. On Monday, Bullard will begin a conference on the Fed’s monetary policy framework in Washington. Bullard is presently the dean of Purdue University’s Mitch Daniels School of Business.
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