Fed officials like the mystique of being seen as financial technocrats, but it’s time to demystify the central bank

Group 1 - The Federal Reserve Chairman Jerome Powell has indicated that lower interest rates may not be forthcoming in December, despite some members advocating for cuts [1] - The Fed's official mandate includes full employment, price stability, and moderate interest rates, but there is an unspoken focus on labor markets and price levels [2] - A shift in thinking about monetary policy is necessary, as interest rates should reflect the value of capital over time rather than merely being seen as the price of money [3] Group 2 - Interest rates should adjust based on supply and demand in investment markets, and stability can hinder necessary flexibility [4] - The Fed does not directly set interest rates but establishes targets for short-term rates, which reflect its monetary policy stance [5] - Falling interest rates are often misinterpreted as a sign of looser monetary policy, but they can also indicate tighter policy when liquidity needs are not met [6][7] Group 3 - The Fed's interest rate targets are estimates aimed at achieving maximum employment and a stable dollar, but their accuracy depends on the Fed's economic models [8]