FedFin Forecast: The Future of the Fed
It’s hard to envision a Federal Reserve still more central to every aspect of U.S. macroeconomic, financial, and fiscal policy, but that’s what FedFin forecasts for 2021. This won’t, though, make it an unalloyed joy to be on the Board of Governors. In concert with this still more omnipotent role will be calls by Democrats for a new racial-equity mandate, faster FedNow implementation, CBDC, and use of the Fed’s portfolio for environmental and social-welfare objectives. The Fed will also be a critical player as Janet Yellen’s FSOC reinstates systemic designations for institutions and activities, likely starting first with initiatives aimed at Fannie Mae and Freddie Mac. Conversely, the GOP, especially likely-incoming Banking Committee Chairman Toomey (R-PA), will call for a far less fiscal Fed, a smaller Fed portfolio, more expansive fintech policies along lines advocated by Acting Comptroller Brooks, and a smaller Fed payment-system footprint.
