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Actually, it doesn’t matter who runs the Fed


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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