Analysis of the New Changes in Monetary Policy under Powell and the Current Situation in the U.S.

Research Article
Open access

Analysis of the New Changes in Monetary Policy under Powell and the Current Situation in the U.S.

Xinhao Wu 1*
  • 1 Hainan University    
  • *corresponding author wxh20010412@sina.com
Published on 13 September 2023 | https://doi.org/10.54254/2754-1169/9/20230376
AEMPS Vol.9
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-915371-45-4
ISBN (Online): 978-1-915371-46-1

Abstract

When Powell assumed office on February 5, 2018, his main monetary idea was to adopt a risk management strategy based on the core components of the traditional Fed policy in order to stabilize the market economy. The 2% inflation target was changed to an average inflation control of 2% over a period of time, meaning that the inflation rate may exceed 2% over time; in addition, the unemployment rate was repositioned to adopt the principle of employment maximization and no longer specify a target. However, as a result of its previous policy, the U.S. stock market equity index experienced a significant year-long decline. When this policy is implemented, the U.S. economy experienced a significant boost after the epidemic's impact on February 2020. There were numerous negative effects, though, and in 2022 the U.S.'s inflation rate shot up quickly and is now a startling 9%. Is the current state a result of the new monetary policy framework's introduction? Is there another reason? Using the time period from Powell's inauguration in 2018 to June 2022, this paper will examine the causes of the change between the old and new U.S. frameworks as well as the current state of the country's economy under the new framework.

Keywords:

monetary policy, Fed, new monetary policy framework, Powell

Wu,X. (2023). Analysis of the New Changes in Monetary Policy under Powell and the Current Situation in the U.S.. Advances in Economics, Management and Political Sciences,9,180-187.
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References

[1]. Powell J.H., “Opening Remarks: New Economic Challenges and the Fed's Monetary Policy Review”, Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City,2020.

[2]. Zheng, Liya, Yi, Xianrong. A major shift in the Federal Reserve's monetary policy and the huge impact on financial markets[J]. Academia, 2022(06):113-128.

[3]. Roberts J.M., “An Estimate of the Long-Term Neutral Rate of Interest”, FED Notes,2018.

[4]. Interest Rate of United States, 2022, https://zh.tradingeconomics.com/united-states /interest-rate.

[5]. Fernald J.G., “Productivity and Potential Output Before, During, During, and After the Great Recession”, NBER working paper,2014.

[6]. Song J. The new framework of the Federal Reserve's monetary policy: background, content and assessment. China Foreign Exchange, 2022(19).

[7]. Inflation Rate of United States, 2022, https://zh.tradingeconomics.com/united -states/ inflation-cpi.

[8]. Expectation of Inflation Rate of United States, 2022, https://zh.tradingeconomics. com/ united- states/inflation-expectations.

[9]. Unemployment Rate of United States, 2022, United States Unemployment Rate - July 2022 Data - 1948-2021 Historical (tradingeconomics.com).

[10]. Wang Jinbin. In-depth understanding of the new framework of the Federal Reserve's monetary policy and its potential risks[J]. New Finance,2022(04):17-21.

[11]. Gasoline Price of United States , 2022, https://zh.tradingeconomics.com/united- states/gasoline- prices.

[12]. Lan T, Zhao Yixian. Recent shifts in the monetary policy framework in the United States and Europe and policy implications[J]. Jilin Financial Research,2021(08):11-13+26.

Cite this article

Wu,X. (2023). Analysis of the New Changes in Monetary Policy under Powell and the Current Situation in the U.S.. Advances in Economics, Management and Political Sciences,9,180-187.

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The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

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About volume

Volume title: Proceedings of the 2nd International Conference on Business and Policy Studies

ISBN：978-1-915371-45-4(Print) / 978-1-915371-46-1(Online)
Editor：Canh Thien Dang, Javier Cifuentes-Faura
Conference website: https://2023.confbps.org/
Conference date: 26 February 2023
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.9
ISSN：2754-1169(Print) / 2754-1177(Online)

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References

[1]. Powell J.H., “Opening Remarks: New Economic Challenges and the Fed's Monetary Policy Review”, Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City,2020.

[2]. Zheng, Liya, Yi, Xianrong. A major shift in the Federal Reserve's monetary policy and the huge impact on financial markets[J]. Academia, 2022(06):113-128.

[3]. Roberts J.M., “An Estimate of the Long-Term Neutral Rate of Interest”, FED Notes,2018.

[4]. Interest Rate of United States, 2022, https://zh.tradingeconomics.com/united-states /interest-rate.

[5]. Fernald J.G., “Productivity and Potential Output Before, During, During, and After the Great Recession”, NBER working paper,2014.

[6]. Song J. The new framework of the Federal Reserve's monetary policy: background, content and assessment. China Foreign Exchange, 2022(19).

[7]. Inflation Rate of United States, 2022, https://zh.tradingeconomics.com/united -states/ inflation-cpi.

[8]. Expectation of Inflation Rate of United States, 2022, https://zh.tradingeconomics. com/ united- states/inflation-expectations.

[9]. Unemployment Rate of United States, 2022, United States Unemployment Rate - July 2022 Data - 1948-2021 Historical (tradingeconomics.com).

[10]. Wang Jinbin. In-depth understanding of the new framework of the Federal Reserve's monetary policy and its potential risks[J]. New Finance,2022(04):17-21.

[11]. Gasoline Price of United States , 2022, https://zh.tradingeconomics.com/united- states/gasoline- prices.

[12]. Lan T, Zhao Yixian. Recent shifts in the monetary policy framework in the United States and Europe and policy implications[J]. Jilin Financial Research,2021(08):11-13+26.

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