I agree with
@realDonaldTrump: We need to keep interest rates low now to keep our economy growing.
One might wonder why we should give special credence to someone with an AB in history. It’s a sign of the times (or a commentary on Mssrs. Moore and Cain) that Mr. Ponnuru’s views are more nuanced and intelligent than those two names mooted for the Fed.
In BloombergOpinion in 2018, Ponnuru writes:
There are several reasons for concern about how the Fed will respond to the next downturn. Because it targets inflation, it may be tempted to tighten money inappropriately after a negative supply shock. In 2008, for example, higher oil prices seem to have led to a more restrictive Fed policy than warranted.
Strangely, Ponnuru does not suggest the things that make sense in light of very real concerns, like the zero lower bound. Moreover, he discusses the issue as if Fed (Committee, Board, System staffs) had not considered the possibility of supply shocks. It’s as if he doesn’t understand a Taylor rule characterizes in part the setting of the Fed funds rate. (And by that standard, the Fed funds rate is currently not altogether that high).
What about setting the target rate at 4% (Blanchard), price level targeting instead of inflation targeting, nominal GDP targeting…? Advocating for a lower interest rate without a formal analytical framework — that way leads (not to madness but) to ad hoc-ery susceptible to political pressure.