I;'d like to point out the mistake of dichotomous "phases," at least in the setting of policy instruments. There is no reason for the Fed to act as if a movement in one direction at time time t rules out a reversal in time t+1. As Brad Delong points out. being data driven means that at any time one is as likely to move one way as the other
Re: "In late 2015, the Fed thought “enough was enough” with “zero” rates and in December undertook the first hike in 7 years!"
Yellen raised rates prematurely. Bonds continued their rise. Prices troughed in Jan 2016 as long-term money flows fell by 80 percent from 1/2013 to 1/2016. Oil fell by 70 percent during the same period.
That's an article for the entire class.
Nicely engaged with the paper!
I;'d like to point out the mistake of dichotomous "phases," at least in the setting of policy instruments. There is no reason for the Fed to act as if a movement in one direction at time time t rules out a reversal in time t+1. As Brad Delong points out. being data driven means that at any time one is as likely to move one way as the other
That´s OK. Just don´t call it "tightening" or "easing"!
Re: "In late 2015, the Fed thought “enough was enough” with “zero” rates and in December undertook the first hike in 7 years!"
Yellen raised rates prematurely. Bonds continued their rise. Prices troughed in Jan 2016 as long-term money flows fell by 80 percent from 1/2013 to 1/2016. Oil fell by 70 percent during the same period.