Federal Policy on the Onset of Covid-19 and the Outlook for Monetary Policy

Congratulations! You landed the internship of your dreams working with Dr. Mary Daly, President of the San Francisco Federal Reserve Bank. As your first big assignment, she has asked you to draft a backgrounder that will be distributed to journalists who cover the Fed and economic policy. The backgrounder will cover Fed policy since the pandemic began plus the outlook for monetary policy over the next few years. She’s given you a word limit (1,200 words). Your new colleagues at the SF Fed have been clear that 1,200 words is an absolute limit; Dr. Daly will not accept anything in excess of the word limit. So you know you have to write several drafts in order to exercise your editing skills and say what you want to say succinctly. (For instance, those last 2 sentences currently have 53 words. Here’s an edited version that has only 24 words: Fed colleagues say those are absolute limits; Daly rejects work over the limit. So you will write and edit several drafts and be succinct.)
Dr. Daly reminds you that the journalists covering the Fed all took economics in college and most were econ majors before they got their master’s in journalism. So you do not have to define basic terms that any econ major should know.
Here are the notes Dr. Daly provided you outlining what she’s looking for in the backgrounder .
• Since COVID really took hold in the United States in the Winter of 2020, economic policy, both monetary and fiscal, has been actively engaged in supporting the macroeconomy. Remind the journalists of the major monetary policy actions taken by the Fed. Start your research at the Fed’s own website with the statements issued following each meeting of the FOMC (https://www(dot)federalreserve(dot)gov/monetarypolicy/fomccalendars.htm).
• Designing and implementing policy that supports the macroeconomy during the pandemic has been challenging. Be sure to include a discussion of the challenges faced by monetary policy.
• Following Chairman Powell’s lead, the messages from the Federal Reserve’s officers have consistently underscored the importance of fiscal policy. It is important that the backgrounder help the journalists understand why we at the Fed have been so adamant that fiscal policy must be used during the pandemic. In this context, I would include both the relief programs implemented over the last year as well as the infrastructure plan currently being debated.
• During our annual Jackson Hole (WY) gathering – nowhere near as restorative when it is held on Zoom – Chairman Powell made a major announcement about how the Fed will approach interest rate changes in the near term. This event clearly should be featured in your backgrounder; it represents a big shift in how we conduct policy and had a major impact on the financial markets because of its effects on expectations.
• Finally, journalists are always asking “What will you do in the future? When will you raise interest rates?” Don’t offer them a specific month and year, but do give them enough information so they can write about the conditions under which we are likely to begin tightening.
• One last note in terms of style: do not include textbook figures such as MPRF & PC. But depictions of data, using Fred as a source, will surely be appreciated by your readers. You’re anxious to make a good impression on Dr. Daly, so you get started!