N.K.

Research & Analysis

Macroeconomic analysis and market structure

Longer pieces and shorter notes on monetary policy, business cycles, and the institutions that move them.

Research · Deep Dive

Argentina's Monetary Report Card: Promise versus Delivery under Milei

Javier Milei won by promising to abolish the central bank and scrap the peso. He kept neither, and now runs the most hands-on monetary regime in the hemisphere. Inflation still collapsed, from 25 percent a month to near 2. The revolution he sold did not do it. A budget surplus propped up by elections and borrowed dollars did, lashed to an exchange-rate band that floats on the very inflation it is meant to kill. The win is real. Nothing makes it last.

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  1. 01

    Research · Macro Note

    Calibrated to the Headline: The Cost of a Reaction Function No One Can Write Down

    In four weeks the market repriced the Federal Reserve's policy path four times, on a hot CPI, a hawkish projection, an energy-driven PCE print, and a payroll miss. News about the economy moves any expected path. The rest of the movement priced something else: how a committee bound by no rule would choose to read that news. Data dependence is the honest name for discretion, and the honesty does not lower its price.

    Monetary Policy

  2. 02

    Research · Commentary

    Pattern and Pretence: The Dot the Chairman Declined to Submit

    In March 2021 the Federal Reserve projected that its own policy rate would end 2022 near zero. It ended above four percent. Kevin Warsh, in his first act as chair, declined to submit a dot and put the instrument that recorded that miss under review, which forces the question of whether removing a forecast the Fed could never honor is reform or the quiet removal of the one yardstick that held it to its own word.

    Monetary Policy

  3. 03

    Research · Macro Note

    The BOJ's June Decision and What Japanese Normalization Means for Global Markets

    The Bank of Japan is the last major central bank still exiting rate suppression. Its expected June move to 1.0%, the highest since 1995, matters less for Tokyo than for everyone who borrowed cheap yen.

    Monetary Policy

  4. 04

    Research · Commentary

    Inheriting Discretion: What Monetary Rules Prescribe for the Warsh Fed

    Kevin Warsh takes the Federal Reserve with inflation above target and nominal GDP running 13% above its pre-pandemic path. Four monetary rules are applied to that inheritance, and they do not agree on what he should do. That disagreement is the point. A central bank bound by a rule cannot select whichever rule is most convenient for the moment. One operating under discretion always can.

    Monetary Policy

  5. 05

    Research · Deep Dive

    Discretion Over Rules: Federal Reserve Policy Departures and the Inflation Surge of 2021–2022

    The largest sustained departure from rules-based monetary policy in the post-Volcker era was followed by the highest inflation since 1983. This deep dive measures the distance the Federal Reserve strayed and tests whether that distance predicted what came next.

    Monetary Policy

  6. 06

    Research · Macro Note

    The ECB's June Decision and the Stagflation Problem It Cannot Solve

    The ECB meets on June 11. Markets are pricing a rate hike at near certainty. The inflation numbers justify it on the surface. The problem is that this inflation does not come from too much spending, and no rate hike can close the Strait of Hormuz.

    Monetary Policy