Simply Put

FOMC participants disagree about current economic conditions as well as the current stance of monetary policy. The neutral fed funds rate, often called r*, is where policy is neither restrictive nor accommodative, and helps guide Fed officials’ assessments of optimal policy in the short- and long-run. As the Fed continues to normalize policy, the bond market will contend with the uncertain destination of short-term interest rates in the post-pandemic economy. In this episode, we talk with Chris Low, Chief Economist with FHN Financial, about the difficulty in estimating r*, how neutral policy estimates impact bond market pricing, and whether r* is a useful measure of broader financial conditions.

Countries around the world have started experimenting with central bank digital currencies, or CBDCs, to modernize their payments systems and increase accessibility to the banking system. Unlike money in a commercial bank, a CBDC in the United States would be backed by the Federal Reserve and could be transferred immediately between accounts, changing financial intermediation and how monetary policy channels into the economy. In this episode, we talk with Jim Cunha, former Executive Vice President of the Federal Reserve Bank of Boston, about the mechanics of CBDCs, how they would alter the banking sector, and what they could mean for the future of monetary policy.

The Federal Reserve helps support financial system resilience by acting as the lender of last resort, providing liquidity to institutions in exchange for high quality collateral. The usage of its 13(3) emergency authority during the 2023 regional banking crisis suggests the Fed may use these powers more frequently in today’s financial system. The rising importance of non-bank institutions has also complicated the Fed’s aim to strike an optimal balance between efficacy and the minimization of moral hazard. In this episode, we talk with Kate Judge, Professor of Law at Columbia Law School, about the Fed’s role as lender of last resort, evaluating liquidity needs versus insolvency, and whether existing facilities can mitigate the next financial crisis.

The historically strong relationship between sentiment and consumer spending has decayed over the last few years. Although households have thus far persevered through the frustration of rapid price increases and higher interest rates this cycle, the University of Michigan’s consumer sentiment survey has begun flashing new hints for a future pullback in personal consumption. In this episode, we talk with Joanne Hsu, Director of the Surveys of Consumers at the Institute for Social Research at the University of Michigan, about the mechanics of the U Mich survey, understanding post-pandemic economic resilience amid persistent pessimism, and why deteriorating sentiment this year could presage a downturn.

New policies are redefining the relationship between the federal government and higher education, curbing spending on research and threatening the revenue streams from endowments and international student tuition. Colleges and universities are looking for short-term fixes while developing longer-term plans to cut services or raise tuition fees. In this episode, we talk with David Jesse, Senior Writer at the Chronicle of Higher Education, about the federal government’s role in the financing of higher education, the financial impacts new policies could have on colleges and universities, and how institutions may adapt to the new landscape.

Chair Powell and the FOMC are facing heightened pressure to cut rates and account for cost overruns associated with renovations to the Fed’s headquarters. President Trump’s vocal desire to remove Powell has prompted investor concerns that monetary policy will be influenced by short-run political incentives rather than longer-run economic outcomes. In this special edition of Simply Put, we talk with Carola Binder, Associate Professor of Economics at the University of Texas, about the disinflationary impacts of central bank independence, the difference between de facto and de jure independence, and the Fed’s institutional guardrails against political pressure.

This year’s big fiscal package, officially titled the One Big Beautiful Bill Act (OBBBA), extends the TCJA’s tax cuts, increases spending on defense and immigration enforcement, significantly cuts Medicaid expenditures, and increases the debt ceiling by $5tn. The law’s budgetary impact will depend on the path of interest rates, how the economy responds to its various incentives, and whether temporary provisions are eventually made permanent. In this episode, we talk with Rachel Snyderman, Managing Director of Economic Policy at the Bipartisan Policy Center, about the OBBBA’s most significant provisions, its impact on federal deficits, and the ways it could affect growth and interest rates.

The US Court of International Trade ruled last month that President Trump does not have the authority to unilaterally implement this year’s tariffs under emergency powers, throwing the president’s newest trade levies into legal limbo. As the case winds its way through the appeals process, the international trade environment hangs in the balance. In this episode, we talk with Ilya Somin, Professor of Law at George Mason University and co-counsel in the recent tariff case at the US Court of International Trade, about the legal pathways for enacting tariffs, last month’s ruling, and his predictions for trade policy once the dust is settled.

Regulations, snarled supply chains, and the scarring effects of the global financial crisis have all contributed to a nationwide housing shortage over the last fifteen years. As housing unaffordability continues to limit prospective homebuyers, homebuilders must now contend with federal policies that will impact housing demand, labor availability, and costs for building materials. In this episode, we talk with Robert Dietz, Chief Economist with the National Association of Home Builders, about why there’s a national housing shortage, how homebuilders view new federal policies, and the best ways to improve residential construction.

The Supplementary Leverage Ratio (SLR) was designed to