Review

The U.S. economy performed well across the board in 1997, with low unemployment, robust economic growth, and the lowest sustained inflation in decades. Nevertheless, the current framework for monetary policymaking does not ensure that inflation is down for the count, says Federal Reserve Bank of St. Louis president Thomas C. Melzer in a speech reprinted here. 

At one time, risk management was limited to insurance and the avoidance of lawsuits and accidents. The new risk management also includes using tools developed for pricing financial options for the management of financial risks within the firm. 

Wholesale payments and settlement systems in G-10 countries have undergone significant change in recent years. Notably, central banks have sought to increase the safety and reliability of these systems. In this article, the author describes two approaches that have been pursued. 

The federal funds futures rate naturally embodies the market’s expectation of the average behavior of the federal funds rate. But, as the authors explain, analysts cannot attempt to identify Fed policy from the behavior of the federal funds futures rate without making somewhat arbitrary additional assumptions.