With the U.S. Senate confirming three Federal Reserve Board governors since last month, following three resignations this year, there will be a new mix of voices at the Fed's Open Market Committee meeting this week.
Last week, the Brookings Institution released Janet Yellen's Dashboard, featuring charts illustrating several of the "most important measures of the economy's vigor" -- for example, that the unemployment rate remains above, while the inflation rate remains below, the Fed's targets.
Once a quarter, the chair of the Fed holds a press conference in conjunction with the FOMC meeting. Here are some questions from CEPR's Dean Baker for Janet Yellen's press conference on Wednesday:
- The inflation rate remains below the Fed's 2.0 percent target. In addition, since it has been below target for the last five years, the Fed can allow for a substantial period of above-target inflation and still keep the average rate at 2.0 percent. Given this history, is there any reason that the Fed should be considering rate hikes or other measures to slow the economy any time in the near future?
- There have been many claims that the unemployment rate is high in large part because of a structural mismatch, that workers don't have the right skills for the jobs that are available. However, during the recovery, the unemployment rate for workers without high school degrees and those with just a high school degree have declined at a slightly faster pace (measured in own percent) than the unemployment rate for college grads. Do you think there is any evidence that structural mismatch is a greater problem in the labor market today than it was before the downturn?
- The I.M.F. recently produced estimates that the value of the implicit "too big to fail" insurance provided to large banks in the United States is $50 billion a year. (It estimated the value of "too big to fail insurance" in the euro zone at $300 billion a year.) Do you think the I.M.F. estimate is reasonable? If so, shouldn't the government be taking steps to downsize large banks so that they are not too big to fail or devise a mechanism to make them effectively pay for this insurance?
- The I.M.F. has also noted that the financial sector is generally under-taxed relative to other sectors. It pointed to its exemption from value-added taxes in most European countries and to state sales taxes in the United States. It recommended a "financial activities tax" on the financial sector to level the playing field. Do you agree that the financial sector has been favored compared to other sectors? If so, would it be appropriate to take steps to make burdens more equal across sectors?