Federal Reserve\'s Monetary Policy

¶ … Fed's Bullard: Current Fed Policy Much Easier Now Than in 2012, which was published by The Wall Street Journal on February 14th, 2013, financial reporter Michael S. Derby methodically examines the claims of Federal Reserve officials, who have stated that changes to their monetary policy have proven to be productive over the last year. The purpose of the article is to provide readers with access to the latest public statements made by Federal Reserve Bank of St. Louis President James Bullard, a voting member of the monetary policy setting Federal Open Market Committee (Derby, 2013) who recently rendered his appraisal of the Fed's latest round of adjustments to its monetary policy. Derby makes reference to a crucial modification in which "the Fed decided to commit to keeping short-term interest rates near zero percent until what is now a 7.9% unemployment rate falls below 6.5%, as long as expected inflation doesn't go above 2.5%" (2013) to provide a tangible example of the Fed's increased willingness to allow American monetary policy to remain adaptable as the nation struggles to recover from a prolonged recession. The article also contains numerous quotes referencing Bullard's evaluation of the Fed's policy on the purchase of bonds, with the central bank official stating in a speech that "the open ended nature of the Fed's bond buying may mean that the current size of the purchases may need to be increased or decreased depending on how the economy performs" (Derby, 2013). The overall emphasis of Derby's article remains focused throughout on the new course embarked on by the Fed when it comes to monetary policy, with the author making it clear that these maneuvers continue to be economically effective.

After reading the article summarized above through a closely critical lens, an informed reader is left with a number of unanswered questions: Has the Fed ever made similar adjustments to monetary policy, and if so, what was the efficacy of these previous efforts? Why did Derby choose to include quotes from only a single source, and does this fact result in an explicit lack of objectivity? The first question is important to consider because providing a certain level of context is an essential aspect of a reporter's job. By reviewing for readers any historical parallels in which the Fed made similar adjustments to its monetary policy, Derby could have provided contextual clues as to whether or not the current strategic shift will produce the intended economic results. The article is adequately informative as published, but an additional level of independent research by the reader is necessary to provide much needed background information. The second question points to the reporter's inability, or unwillingness, to obtain secondary sources to support his story. As a reader, one is accustomed to being presented with quotations from figures representing both "sides" of the story, so for Derby to repeatedly quote Bullard, a banker who works as part of the Fed, while providing no additional sources of information is slightly disconcerting. When Derby quotes Bullard as saying that he "continues to worry that while inflation is low, a rising Fed balance sheet could start to increase the public's worry over price pressures" (2013), this opinionated forecasting of future events should be balanced by the inclusion of a quote from a secondary source, preferably another expert in the field who disagrees with Bullard's assessment. Despite these questions, the article provided a general outline describing the recent shifts in the Fed's monetary policy, with Derby providing access to the inner workings of one of America's most misunderstood institutions.