Fed Index Shows First Tightening Bias Since 2007

The video discusses a new indicator designed to measure the Federal Reserve's bias towards tightening or easing monetary policy. It combines the Taylor rule with financial conditions to provide insights into the Fed's stance. The indicator currently suggests a tightening bias, influenced by factors like unemployment, inflation, and financial conditions. The discussion also covers the impact of global events, such as Brexit, and the balance sheets of major central banks like the Fed, ECB, and BOJ. The video concludes with predictions about future monetary policy actions.

What additional component was added to the Taylor rule in the new Fed indicator?

• Interest rates

• Financial conditions

• Government spending

• Stock market trends

What significant change did the indicator show for the first time since 2007?

• A neutral bias

• An easing bias

• No bias

• A tightening bias

How might Brexit affect the Fed indicator according to the discussion?

• It will stabilize the indicator

• It will likely turn the indicator slightly negative

• It will make the indicator more positive

• It will have no effect

Which central bank is expected to announce more easing and asset purchases soon?

• Federal Reserve

• European Central Bank

• Bank of Japan

• Bank of England

What action is the Fed expected to take regarding its balance sheet in 2018?

• Maintain the current balance

• Expand the balance sheet through new investments

• Increase asset purchases

• Shrink the balance sheet by slowing reinvestments