Nine Months of Monetary Restraint: What’s Next?

Nine Months of Monetary Restraint: What’s Next?
The Federal Reserve building in Washington, D.C. MDart10/Shutterstock
Robert Genetski
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Commentary
Faced with the highest inflation in 40 years, the Federal Reserve decided a year ago to adopt a restrictive monetary policy. Although there is widespread agreement monetary policy has turned restrictive, it is less clear just how restrictive monetary policy has been and what effect it will have on the economy and inflation.

Measuring Monetary Restraint

There are two ways to measure the impact of monetary policy. One is to use the change in interest rates. This is the Fed’s preferred measure. Specifically, the Fed targets the overnight federal funds interest rate as its main tool to set monetary policy.
Robert Genetski
Robert Genetski
Author
Robert Genetski is a public speaker, author, columnist, and one the nation’s leading economists. He has taught economics at the University of Chicago’s Graduate School of Business and NYU. His latest book is “Rich Nation, Poor Nation: Why Some Nations Prosper While Others Fail.” Genetski’s website is ClassicalPrinciples.com.
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