*last updated October 7, 2018
Financial pundits love to speculate about how “tight” or “easy” the Federal Reserve’s monetary policy is. Speculation is easy. Few try to quantify just how “tight” or “easy” the Fed’s monetary policy is.
Our Fed Policy Risk Model quantifies and defines the Fed’s current monetary policy stance.
- The higher the value, the tighter the Fed’s monetary policy.
- The lower the value, the easier the Fed’s monetary policy.
danger = 0.5
Historically, this value exceeded 0.5 when bear markets started.
*This indicator is updated once a month.
- Readings above 0.5 demonstrate that the Fed’s policy is tight.
- Readings below 0.3 demonstrate that the Fed’s policy is easy.
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