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Actually, it doesn’t matter who runs the Fed

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Along with the pace of tapering, the big question in US monetary policy right now is whether Joe Biden will replace Jay Powell as Fed chair. But Edward Price, a former British economic official and current teacher of political economy at New York University’s Center for Global Affairs, argues that — from a monetary policy perspective — it doesn’t matter who heads the Federal Reserve.

Truth be told, it doesn’t really matter who runs the Fed. Should that vex, consider this: if modern central banks are independent, why do they act as anything but?

The evidence for this charge is plentiful.

Today, low policy rates are no longer a countercyclical tool. Instead, they are a structural feature of the financial system. Want to counteract a financial crisis? Low rates. Want to sidestep a market meltdown? Low rates. Want to encourage the labour market, tout consumption, protect the debt stack, banish a pandemic or save a single…

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