It might depend on the starting point. Barry B. Bannister, head of institutional equity strategy at Stifel, tells Peter Eavis of DealBook that the Fed’s main policy rate, the federal funds rate, was in effect significantly lower in the years after the 2008 financial crisis than the actual rate.
Call it the shadow rate. “The economists Jing Cynthia Wu and Fan Dora Xia used the yields on government bonds to calculate a shadow fed funds rate. Their intent was to estimate what that rate would have been if it could have fallen below zero,” Mr. Eavis writes. “In the years after the crisis, this shadow rate fell as low as minus 3 percent in May 2014.”
Why that matters now. “The Fed has taken the fed funds rate from zero in 2015 to 2.25 percent today. But using the shadow rate, the Fed has effectively taken that rate from minus 3 percent in mid-2014 up to 2.25 percent today, a much greater increase, and one that might now be pressuring the economy.”
A note of caution: From a growing G.D.P. to healthy loan issuance, there are still plenty of reasons to question whether monetary policy is really too stringent.
Hannah Karp, a former reporter at The Wall Street Journal, has been appointed as the new editorial director at Billboard magazine.
James Quincey, Coca-Cola’s chief executive, will now also serve as its chairman.
Tesla’s general counsel, Todd Maron, is leaving the company. He will be succeeded by Dane Butswinkas, a Washington trial lawyer.
Unilever’s chief marketing officer, Keith Weed, will retire in May.
The speed read
• Anta, China’s largest sportswear brand by revenue, is reportedly close to a $6.3 billion deal to acquire Finland’s Amer Sports, which owns brands like Salomon and Louisville Slugger. (FT)