Fed Thoughts: Norwegian Blue Blues

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Fed Thoughts: Norwegian Blue Blues

Vincent Reinhart

Vincent Reinhart - Chief Economist & Macro Strategist

In a recent speech, Federal Reserve Bank President John Williams reassured that central bankers are on the job. “As nature abhors a vacuum,” he opened, “so monetary policy abhors stasis.”1 Huh? Stasis is conventionally defined as a condition in which things do not change. As plotted below, Fed officials have changed their policy rate complex exactly once in the past 2,800 days. That is, they acted at one meeting in the past sixty-one regularly scheduled ones, consistent with an embrace, rather than abhorrence, of stasis.

1 http://www.frbsf.org/economic-research/publications/economic-letter/2016/august/monetary-policy-and-low-r-star-natural-rate-of-interest/?utm_source=frbsf-home-economic-letter-title&utm_medium=frbsf&utm_campaign=economic-letter, as accessed on August 17, 2016.

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