This month, we’re highlighting a series of videos about different types of inflation, several pieces of new content about small-business conditions plus news of our State of Small Business Symposium, and—last but not least—a definition of monetary policy.
Thanks for being here, The Cleveland Fed Digest team
Technology changes, process adjustments, and changes in workforce skills are the main drivers of increased productivity, according to our recent Survey of Regional Conditions and Expectations (SORCE).
About three-fourths of respondents from our region said their organization uses AI, and among those who reported AI use, roughly nine in 10 said it had no impact on staffing levels.
By augmenting their lending with support services including flexible underwriting, market analysis, financial counseling, and deep knowledge of their communities, CDFIs play a key role in community and economic development, according to a new report.
Firms report that they’re getting lots of applicants who have the technical knowledge to fill a job but lack the so-called soft skills connected to teamwork, reliability, and communication.
It’s not clear yet whether policy will need to be more accommodative or more restrictive, Cleveland Fed president Beth Hammack said in an April 15 CNBC interview, making this a good time “for us to stay patient and wait and see” how economic indicators turn out.
As part of its work to address economic data gaps, the Minneapolis Fed’s Center for Indian Country Development is working with tribal governments to strengthen public finance data in Indian Country. The survey is open until August 1.
CALENDAR
May 14
Conversations on Central Banking: The Case for Central Bank Independence
Monetary policy is how the Federal Reserve manages the cost and availability of money and credit to help achieve its economic goals. Those goals—maximum employment, stable prices, and moderate long-term interest rates—are what people call the Fed’s “dual mandate.” (While there are three goals, low inflation usually results in moderate long-term interest rates, so economists focus on the first two, hence the “dual mandate.”) The Fed’s main lever for implementing monetary policy is adjusting its target for the federal funds rate, or the interest rate banks charge each other for overnight loans. When the Fed changes this rate, it influences other short-term interest rates, longer-term interest rates like mortgages, and financial conditions more generally. These shifts affect household spending on things like homes and cars and business spending on things like equipment and structures, and all that spending impacts employment and inflation. In the broadest terms, monetary policy works by spurring or restraining growth of overall demand for goods and services in the economy. When overall demand slows relative to the economy’s capacity to produce goods and services, unemployment tends to rise and inflation tends to decline. The Federal Open Market Committee (FOMC) can help stabilize the economy in the face of these developments by stimulating overall demand through an easing of monetary policy that lowers interest rates. Conversely, when overall demand for goods and services is too strong, unemployment can fall to unsustainably low levels and inflation can rise. In such a situation, the Fed can guide economic activity back to more sustainable levels and keep inflation in check by tightening monetary policy to raise interest rates. Beyond setting interest rate targets, the Fed has other tools including buying and selling securities and providing forward guidance about future policy.
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