“Populist arguments against easy monetary policy are flimsy, at best. But so are populist arguments for tightening monetary policy – in the US”
the top. These are big changes, and offer i mportant confirmation that lower-income families are finally sharing in the economic recovery.
The unconventional monetary policies of recent years may also have some new effects. Low interest rates have lately been squeezing banks’ profits. In Europe, this has become particularly pronounced, because banks are unable to pass negative interest rates on to depositors. Any selfrespecting populist should like this squeeze on banks, especially one who is still angry about the 2008 global financial crisis.
Ultimately, easy money probably does more to reduce income inequality than to exacerbate it – an observation supported by econometric estimates. Nonetheless, it is not a particularly reliable tool for balancing income distribution. That should not be surprising: ensuring a more equitable distribution of income is not a central bank’s job.
The Fed and other central banks are balancing rapid growth not against equality, but against the dangers of future overheating and financial instability. They view their jobs as managing the overall economy. They are right to do so.