Bloomberg Talks
Harvard University Professor Kenneth Rogoff Talks Markets
Apr 30, 2024
Harvard University Economics Professor Kenneth Rogoff discusses challenges faced by the Federal Reserve in controlling interest rates and inflation amid global economic pressures. He explores historical trends, inflation control strategies, and the impact of episodic inflation spikes on real interest rates and economic growth.
09:28
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Quick takeaways
- Fed's limited influence on long-term rates due to global market dynamics.
- Political pressures can influence Fed's decision-making and maintaining independence is crucial for economic stability.
Deep dives
Impacts of Long-Term Interest Rates on Fed Decisions
Long-term interest rates play a crucial role in the Federal Reserve's decision-making process. The Fed's influence over long-term rates is limited, as these rates are largely affected by global market dynamics. While quantitative easing can temporarily lower long-term rates, the Fed must consider the real interest rate and the potential impact on the economy when setting Fed funds rates. The Fed may need to reassess its strategies due to the sustained high long-term rates.
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