美联储最后一根稻草（美联储的终极挑战）

美国8月通胀数据超过预期，引发全球市场巨震。美联储继续积极对抗高通胀，9月第三次加息75个基点，并暗示年底前将有更多加息。

在美国耶鲁大学高级研究员斯蒂芬·罗奇（Stephen Roach）看来，这样的力度恐怕还不够。“美联储和市场都低估了价格压力的扩散以及在此背景下重回2%目标通胀水平所需要的货币紧缩力度。”他提出，美国通胀在今年3月达到峰值，但3月之后的回落速度非常缓慢，只关注“通胀峰值”会使人们忽略这一关键问题。他表示，“如果我们假设当前的通胀回落轨迹最终会比预计拉得更长，我估计名义联邦基金利率或需升到5%-6%的区间才能达到目标。”

罗奇曾任摩根士丹利亚洲区前主席，1970年代末在美联储工作时，他曾见证美联储应对恶性通胀的全过程。

2022年上半年，美国实际GDP连续两个季度出现下降。罗奇对此表示，目前依然是技术性衰退，并不代表美国经济一定会陷入大规模周期性衰退。“但在政策利率达到限制性（restrictive）水平之前，美联储可能还要进行几次加息，最终导致的‘范式转换’或将无比剧烈，也正是这点让我相信美国经济将在2023年不可避免地陷入衰退。”此外，在俄乌冲突引发的能源危机下，欧盟已经步入经济衰退，美国2023年也很有可能面临同样命运，全球经济衰退是大概率事件。

罗奇认为，美元还会继续保持强势。随着美元攀升，其他国家货币贬值，但其出口竞争力也会随之得到增强。更主要的问题来自于债务偿还压力，尤其是已经债台高筑的新兴市场经济体。

“各国央行鼓励从以收入为基础的经济向对资产（高度）依赖的经济过渡是鲁莽和不负责任的。”罗奇强调，金融稳定相关的考虑需要被正式纳入具有法律约束力的文件以及央行使命当中。

但这也提出了最棘手的问题之一：央行如何用单一政策工具来平衡多重目标。他表示，只有真正独立于政治压力的央行才能以保罗·沃尔克（Paul Volcker）式的纪律和专注来解决当前一系列的棘手问题——“坚定不移”（Keep At It）并不容易，但归根结底，这是唯一的出路。

以下为访谈实录：

Q1：8月美国通胀略高于预期，显示通胀具有粘性，您认为这一现象背后主要有哪些因素支撑？目前来看，通胀见顶了吗？如何看待未来一个阶段美国的通胀形势和中长期通胀中枢的变化？美国真的还能回到2%的通胀率吗？

罗奇：“略高”这个说法还是低估了8月美国令人失望的通胀表现。5、6月美国通胀经历了极其迅速的增长，相比起来，8月通胀确实仅“略高于”7月，但依然远高于大部分分析师和市场人士的预测——此前，人们曾预计会出现连续大幅下滑。

与前几个月一样，8月的通胀表现令人失望。个人消费支出（PCE）总平减指数上升0.3%，核心PCE平减指数——长期以来美联储最喜欢的通胀指标——攀升0.6%。与去年同期相比，8月美国核心PCE平减指数加速升至4.9%（7月为4.7%），而不是像大多数人预期的那样下降。

这些数字确实仍然低于3月的峰值，但只关注“通胀峰值”会导致我们忽视美国通胀问题最关键的一个方面：虽然3月美国通胀确实很可能已经达到峰值，但比起这个，达峰后的通胀回落轨迹要重要得多，而3月以后的通胀回落速度非常缓慢。事实证明，美国当前这种长期、广泛的通胀极其棘手，因此，美联储想回到2%的通胀目标水平会是一个非常漫长、艰难的过程。所谓的通胀“达峰”的说法其实就是变相地说“通胀是暂时的”，未来将证明这是一个重大错误。

Q2：联邦基金利率已经上调至3.00-3.25%，您对四季度和未来一年美联储加息和缩表节奏，以及联邦基金利率的峰值有何展望？

罗奇：美国当前的名义联邦基金利率（FFR）为3.1%，仍比整体CPI通胀率三个月来的均值8%低整整5个百分点。这提出了一个重要的问题：在判断货币政策立场时，我认为更重要的是关注整体通胀，而不是核心通胀。关注核心通胀就意味着假设一些主要的价格冲击都是暂时性的，像美联储主席鲍威尔之前做的那样。

在上世纪70年代，美联储原主席Arthur Burns——也是我的第一任老板——就曾反复忽视一系列短暂价格冲击，最终酿成大错。而时至今日，美联储还在重复着这个错误，在分析时剔除所谓的一次性或者说特殊的因素，只关注核心通胀率，而实际情况远比这个指标所显示的要棘手得多。美联储和市场都低估了价格压力的扩散以及在此背景下重回2%目标通胀水平所需要的货币紧缩力度。

鲍威尔表示，为遏制通胀压力，美国须采取“限制性”（restrictive）货币政策。基于整体CPI的中性政策利率——即1960-2021年间实际联邦基金利率的均值——为1.1%。所谓的“限制性”利率肯定要高于中性利率，这里为了便于讨论，我们姑且假设实际联邦基金利率至少要到2%。但是，美国当前的实际联邦基金利率为-5%，甚至还远远没达到中性利率，更不用说限制性的利率了。如果我们假设当前的通胀回落轨迹最终会比预计拉得更长，我估计名义联邦基金利率可能得升到5-6%的区间才能达到“限制性利率”的标准。这意味着，从目前的利率水平来看，美联储可能才打赢了这场抗通胀斗争的一半。

Q3：您如何看待本轮加息对美国经济的影响？如何展望美国的经济前景？美联储是否低估了经济衰退和劳动力市场崩溃的可能性？

罗奇：美国经济已经明显放缓，但至今尚未陷入衰退，从高度紧俏的劳动力市场也可见一斑。2022年上半年，美国实际GDP连续两个季度下降。尽管很多人将此和过去的经济衰退联系起来，但目前来看，这依然是技术性的，并不代表美国经济一定会陷入大规模周期性衰退。不过，如果我对于美联储为控制通胀而所需落实的加息幅度估计准确，那么在2023年，美国经济很可能无法避免衰退。

我们都知道，货币政策对于实体经济的冲击存在一个很长的滞后期，往往在12-18个月之间。我自己的研究显示，实际利率的变化对于评估货币政策对实体经济的冲击非常关键。基于此，结论已经非常明了：美联储已经释放信号表明将从历史性的大规模货币宽松转向更加限制性的政策立场。这基本上已经相当于一场大规模的范式转换。

过去三次美国联邦公开市场委员会（FOMC）会议上连续加息75个基点，已经是1982年初（保罗·沃尔克执掌美联储的时代）到现在为止最大幅度的货币紧缩了。在政策利率达到限制性的水平之前，美联储可能还要再进行几次加息，最终导致的范式转换或将无比剧烈，也正是这点让我相信美国经济将在2023年不可避免地陷入衰退。

Q4：您对美元指数未来走势如何展望？强势美元将对非美元国家和全球市场带来哪些放大效应和外溢风险？

罗奇：这个问题非常重要，我试着回答。两年多前，我曾警告美元可能会崩溃，但结果和我想的大相径庭——美元不仅没有暴跌，反而节节高升。因此，我现在对于货币方面的预测非常谨慎。我当时预测美元崩溃有三个原因：美国剧增的经常账户赤字、当时非常消极的美联储、以及那时我们对其他货币过度消极的判断，尤其是欧元、人民币以及墨西哥比索和加拿大元（《北美自由贸易协定》除美国外的两方）。

虽然当时美国经常账户赤字确实持续扩大，但事实证明，至少迄今为止，这点并不重要。美联储当然也已经幡然醒悟，积极牵头应对美国严峻的通胀形势，这是推高美元的决定性因素。如上所述，我推测美联储为了达到控制通胀的目的，还要以超出市场预期的幅度继续收紧货币政策。事后反思我之前对美元的错误预测，这次我认为，美元还会继续保持强势。不过鉴于我过去糟糕的预测，我必须强调我的结论可能未必准确。

强势美元的外溢效应不言而喻。随着美元攀升，其他国家货币贬值，但其（出口）竞争力也随之得到了增强。（更主要的）问题来自于债务偿还压力，尤其是已经债台高筑的新兴市场经济体，包括已经发生债务违约的斯里兰卡、黎巴嫩、赞比亚，全球一向“最受欢迎的潦倒国家”阿根廷，以及债务违约已现端倪的孟加拉国和巴基斯坦。

Q5：一些观点认为，全球竞争性加息的趋势正在带来“反向货币战争”，您对此是否赞同？这会带来哪些危害？在平抑通胀之前，我们是否正面临新一轮金融危机和全球性经济衰退的风险？

罗奇：除中国以外，全球大多数经济体都在经历通胀，那么除了美国以外的这些国家同样收紧货币政策也是正确的。但是，美联储在全球加息大潮中扮演领头羊的角色，叠加美元作为全球主导储备货币的地位，让各国央行都开始逐渐意识到一个残酷的事实：零利率的时代已经结束了。

在前些年，基于“通胀已经结束”这样一个错误的假设，我们几乎没有对主权债务进行任何实质性的约束；因为偿债成本极低，各国财政部门肆意开支，并误以为这种情况能永远持续。今天的高通胀以及货币紧缩彻底颠覆了这种错误的逻辑。在俄乌冲突引发的能源危机的冲击下，欧盟已经步入经济衰退，美国2023年也很有可能面临同样的命运，全球不发生经济衰退才是奇迹。

在后全球金融危机时代，尤其是2012-2016年间，全球还能依赖于中国经济来缓冲冲击，但这次，中国经济也面临多重挑战。美国、欧洲、中国加起来占全球GDP 的49%，这三个火车头一旦减速，2023年全球经济陷入衰退就几乎成为定局。

Q6：面对通胀形势、经济衰退与金融风险，您对非美经济体及其央行的应对措施有何建议？

罗奇：这个问题很难有一个简单的、绝对奏效的解决方案。事后来看，我们可以轻易地批评伯南克、格林斯潘等央行政策制定者，他们把自己的名声全都葬送在了对“大缓和”的幻想中。今天我们已经明白，对于这种幻想的执着来自于一个关键的错误假设，那就是通胀真的已经一去不返了。市场、财政部门、主权债务管理机构都非常乐意随大流，而且他们还有“现代货币理论”（MMT）这个伪理论为他们的集体策略提供智力支持。

从很多方面看，这几乎就是上世纪70年代在重演。当时我刚毕业，加入美联储担任经济分析师。时任美联储主席Arthur Burns坚持认为当时的通胀是暂时性的，是特殊的（一次性的）因素导致的，和货币政策无关。遗憾的是，时隔五十年后，鲍威尔重蹈覆辙。要想解决这一系列难题，尤其是在当前高度紧张的政治环境下，我们不妨回顾一下保罗·沃尔克（Paul Volcker）留下的经验。

很明显，鲍威尔把沃尔克的自传《坚定不移》（Keep At It）摆在了他桌上一个显眼的位置。他肯定也仔细读过这本书——他2022年8月在杰克逊霍尔的讲话就说明了这一点。但明白货币纪律的好处是一回事，尤其是在大缓和时期长期缺乏货币纪律的情况下，坚持致力于重塑货币纪律、防止滞胀之中的全球经济走向危机又是另外一回事。和当年的沃尔克一样，鲍威尔即将面临这样的终极挑战。

Q7：历史上看，美元大幅波动往往使全球货币体系陷入“无锚”的动荡时期。这一次，您认为国际货币体系会迎来哪些新的发展趋势？各国应该如何共同改进全球货币体系的治理？全球是否有必要以及如何从单一的货币通胀目标制过渡到包括稳定增长和维护金融系统稳定性的多目标管理体系？

罗奇：长期以来，我一直支持在现代中央银行的职责中增加金融稳定这个目标。在2000年代初互联网泡沫破裂后，我首先提出这个问题，在2008-2009年全球金融危机后，我又一再重申这一点。我坚持认为，各国央行鼓励从以收入为基础的经济向对资产（高度）依赖的经济过渡是鲁莽和不负责任的。

由于盲目相信“大缓和”，加之极低的利率以及从估值过高的资产中榨取财富的新技术，资产依赖型经济声称可以支持收入受限的经济增长，并且不产生任何代价——也许他们确实是这么想的。但我警告说，总有一天通胀会卷土重来，“大缓和”将不再伟大。

这一天已经来了，同时金融风险正在全球蔓延。是的，央行政策制定者们也知道他们应该更加认真地对待这种风险。在全球金融危机之后，大多数主要央行开始定期发布“金融稳定报告”，国际货币基金组织（IMF）现在也在发布基于国际视角的类似报告。但这还不够，这充其量只是一项“软”金融稳定任务，只是口头上说说可能出现重大问题。决定金融稳定的因素——资产价值、杠杆率和与资产相关的对实体经济的扭曲——需要明确化，纳入正式的、具有法律约束力的文件（即国会立法）以及央行的使命当中。

中国人民银行原行长周小川2016年曾展望过“多目标货币政策”。在不损害现有价格稳定和充分就业目标的情况下，从软金融稳定规定转向硬金融稳定规定，将是朝着“多目标货币政策”方向迈出的重要一步。虽然从理论上讲，多目标体系框架下的国际协调会很理想，但这种情况发生的实际可能性接近于零。这就要求各央行在应对自身金融稳定风险的同时，也要考虑到其行动可能产生的全球外溢效应。美联储副主席布雷纳德（Lael Brainard）最近在纽约联储研究会议上的讲话体现了对这种做法的重要认可。

而这提出了最棘手的问题之一——用一个单一的政策工具来平衡多重目标。今天，这意味着要解决通胀控制和金融稳定之间的权衡问题；未来，失业率无疑会上升，这可能意味着其他的权衡。只有真正独立于政治压力的央行才能以沃尔克式的纪律和专注来解决这个棘手的问题。“坚定不移”并不容易，但归根结底，这是唯一的出路。

以下为英文实录：

Q1: US inflation ran slightly higher than expected in August, indicating a level of stickiness. What factors have been propping it up? Do you see it peaking at the moment? How do you foresee inflation and its mid- to long-term average in the US going forward? Is it ever possible to go back to 2%?

A: “Slightly higher” is an under-statement of the disappointing August inflation reports. Yes, following extremely rapid increases in May and June, the August figures were “only” slightly higher when compared with July on a sequential basis; however, they were significantly above the expectations of most forecasters and financial market participants who were expecting a significant sequential decline.

Moreover, in keeping with earlier disappointments on the inflation front, the disappointments in August were broad-based. The total personal consumption expenditures (PCE) deflator was up 0.3% sequentially, and the “core” PCE deflator —long the Fed’s favorite inflation metric — was up 0.6%; on a year-over-year basis, the core PCE deflator accelerated to 4.9% in August (from 4.7% in July) — again, rising instead of falling as most were expecting.

Yes, these numbers remain below the peak rates of last March. But the debate over “peak inflation” misses the most crucial aspect of the US inflation problem: While the overshoot in March may well have been the peak, far more important is the trajectory of post-peak moderation; the subsequent slowing from the March 2022 peak — disinflation in a technical sense —has been disappointingly modest, at best. With persistent and broad-based inflation proving exceedingly intractable, the return to the Fed’s 2% target is likely to be a long and arduous process. The peak inflation debate is just another way to pre-judge the inflation problem as transitory. That will go down in history as a major mistake.

Q2: The Federal funds rate has been elevated to 3.00-3.25%. What is your prediction of the pace of the Fed’s rate hike and balance sheet reduction in Q4 and 2023? And at what level do you expect the Federal funds rate to peak?

A: The nominal federal funds rate (FFR), now effectively at 3.1%, remains five full percentage points below the three-month average of the headline CPI inflation rate of 8%. That raises an important point. In judging the stance of monetary policy, I think it is important to focus on headline inflation — not the core. The very premise of the core is to dismiss major price shocks as transitory, just as Powell initially did.

I am still haunted by Arthur Burns, who as Fed Chair (and my first boss) in the early 1970s committed the “original sin” of ignoring one transitory price shock after another until it was far too late. To the extent that today’s monetary policymakers continue to be misled by an inflation problem that proves to be more intractable than a focus on core inflation suggests, by stripping out so-called one-off, or idiosyncratic factors, they and the financial markets are underestimating the diffusion of price pressures and the ultimate extent of monetary tightening that will be required to return inflation to a 2% target.

Fed Chair Jerome Powell has now conceded that a “restrictive” monetary policy will be needed to tame inflation. Based on the headline CPI, the neutral policy rate – basically an average of the real FFR from 1960 to 2021 –is 1.1%. Restrictive, by definition, must be a number greater than neutrality; for the sake of argument, call it a 2% real FFR. With the real FFR currently at -5%, the Fed is not even close to being neutral, let alone restrictive. Under the presumption that the disinflationary trajectory proves to be more drawn out than most are expecting, I suspect that the nominal FFR may well have to rise into the 5% to 6% zone to accomplish that task. That suggests that the Fed may have only completed about half of its inflation-control campaign.

Q3: How do you evaluate the impact on the US economy of the latest rate hike? What is your outlook of the US economy? Has the Fed underestimated the likelihood of a recession and labor market collapse?

A: The US economy has clearly slowed, but, as an exceedingly tight US labor market suggests, most certainly is not in recession today. Two consecutive quarterly declines in real GDP in the first half of 2022, while invariably associated with recessions in the past, currently appear to be more technical than decisive in signaling the onset of a broad-based cyclical contraction. But, if I am even close to being correct on the Fed rate hikes required for inflation control, recession is the most likely destination for the US economy in 2023.

We all know that monetary policy impacts the real economy with long and variable lags – somewhere in the 12-to-18-month range. My own research has long stressed that changes in real interest rates are especially critical in assessing the impacts of monetary policy on the real economy. On that basis, the verdict is inescapable: The Fed has conveyed the message that it will be moving from a record degree of monetary accommodation to a restrictive posture.

This is the functional equivalent of a major regime change. The three consecutive 75 basis points rate hikes in the last three FOMC meetings are already the sharpest Fed tightening since early 1982 in the Volcker era. With several more rate hikes to come before the policy rate reaches the restrictive zone, the ultimate regime change is likely to be all the more dramatic, leading me to conclude that recession in the US economy should inevitably follow in 2023.

Q4: How will the USD index evolve going forward? What amplification or spillover effect will a strong dollar have on non-dollar economies and the global market? Why do dollar fluctuations have such strong global impacts?

A: I will attempt to answer this important question with a great sense of personal humility. A little over two years ago, I warned of a crash in the US dollar. It was a terrible forecast – the dollar, of course soared rather than plunged. That has made me wary of attempting to say anything intelligent about a currency forecast. My dollar crash call was based on three factors – a sharply widening US current account deficit, a then passive Fed, and excess negativism on other currencies — especially the euro, the renminbi, and the currencies of America’s NAFTA (now USMCA) partners, Mexico, and Canada.

While the US current account deficit did, indeed, go from bad to worse as I had expected, that hasn't really mattered – at least, not yet. The Fed, of course, finally woke up from its slumber and has led the charge in tackling a serious US inflation problem. That was the decisive factor in pushing the dollar sharply higher. As I have argued above, I suspect the Fed had considerably further to go on its anti-inflation monetary tightening campaign than market participants expect. By the postmortem “logic” of assessing my mistaken dollar forecast, that suggests that strength of the greenback is likely to persist. But I underscore the painful disclaimer that I must attach to that conclusion – my forecasting record on the dollar is terrible!

The spillovers speak for themselves. While rest of the world enjoys a boost in competitiveness that comes from weakness in their currencies that arise from a surging dollar, the problem shows up on the debt service side of their financial equations. That is especially the case for overly-indebted emerging economies — from Sri Lanka, Lebanon, and Zambia where debt defaults have already occurred to Argentina — long the world’s favorite basket case — Bangladesh, and Pakistan where troublesome signs on debt service are already evident.

Q5: Countries around the world are racing to raise the interest rate. Some believe this is risking a “reverse currency war.” Do you share this view or not? What harm would such a war do if it were to happen? Are we facing a new round of financial crisis or global recession before inflation is brought under control?

A: To the extent the inflation outbreak is global in scope —and that is certainly the case in most major economies, with the notable exception of China — then monetary tightening is also appropriate in nations other than the United States. However, with the Fed leading the charge in addressing inflation and with the US dollar still the dominant reserve currency in the world, central bankers around the world are waking up to the most uncomfortable truth in a generation — that the days of zero interest rates are over.

Underpinned by the false presumption that inflation was dead, there was little or no discipline to sovereign debt management practices; fiscal authorities spent with reckless abandon because debt service was costless, and they mistakenly thought it would stay that way in perpetuity. Today’s inflation surge, and the monetary policy implications it implies, turns that misdirected logic inside out. With Europe already in the early stages of a recession induced by constraints on Russian energy supply as an outgrowth of the war in Ukraine and with the US likely to be headed for the same fate in 2023 as I indicated above, it will take nothing short of a miracle to avoid a global recession.

In the post-GFC era–especially the years 2012-16 — the world could count on a strong and resilient Chinese economy to cushion any blow. During that five-year period, China’s average real GDP growth of 7.4% was the only thing that kept the world economy from falling back into renewed global recession. That will not be the case this time, as the Chinese economy is facing very stiff headwinds on many fronts that will hold average growth below 4% during 2022-23, according to the latest forecasts of the IMF, the World Bank, and the OECD. With no one to fill the void as this dominant chunk of the world weakens, global recession in 2023 seems increasingly inevitable.

Q6: What policy suggestions do you have for non-dollar economies and their central banks on how to cope with inflation and the risks of recession and financial crisis? What are the key factors that are indispensable to global efforts to pull the economy out of stagflation?

A: There is no simple answer, no sure-fire policy recipe, to address this important question. With the benefit of hindsight, it is easy to be critical of leading central bankers, especially Ben Bernanke and Alan Greenspan of the United States, who threw the full force of their considerable reputational capital behind the fantasy of the “Great Moderation.” As we are seeing today, belief in the permanence of such a depiction was an outgrowth of one key erroneous assumption — that inflation was, indeed, dead. Market participants, fiscal authorities, and sovereign debt managers were all more than happy to go along for the ride, and they had the charlatans of a new theory — modern monetary theory — to provide intellectual support for their collective gambit.

In many respects, this is the mirror image of what happened in the early 1970s, when fresh out of graduate school, I began my career as professional economist at the Federal Reserve Board. As I noted above, for then Fed Chair Arthur Burns, the outbreak of inflation was all transitory — “special (nonrecurring) factors” as we dubbed them back then —that had nothing to do with monetary policy. Jerome Powell, unfortunately, made the same mistake some 50 years later. The indispensable recipe for solving this tough set of problems, especially in today’s highly charge political climate, can be found in the discipline and legacy of Paul Volcker.

Apparently, Powell has placed Volcker’s autobiography, Keeping At It, in a prominent place on his desk. I don’t doubt that he has read it carefully — his August 2022 Jackson Hole speech was crystal clear on that point. But it’s one thing to understand the merits of monetary discipline, especially after the lack of such discipline during the Great Moderation. It is another matter altogether to stay the course of restoring that discipline as the only real antidote for a stagflationary world headed for crisis. Like Volcker, this will be Powell’s ultimate test.

Q7: A volatile dollar would usually throw the global monetary system into “unanchored” turmoil, as seen in history. What new trends do you expect to see in the global monetary system? How can countries work together to improve global monetary governance? Should central banks consider replacing the single mandate of inflation targeting with a multi-target system that also aims at sustained growth and financial stability?

A: I have long been on record in favoring the addition of a financial stability mandate to the goals and objectives of modern-day central banking. I first argued the case in the aftermath of the bursting of the dotcom bubble in the early 2000s and then I reiterated the point again and again in the aftermath of the Global Financial Crisis of 2008-09. Central banks were reckless and irresponsible, I maintained, in encouraging the all-too-convenient transition from income-based to asset-dependent economies.

Enabled by blind faith in the Great Moderation, the combination of exceedingly low interest rates, and new technologies of wealth extraction from over-valued assets, the asset-dependent economy purportedly could support income-constrained economic growth with great impunity. Or so they thought. The day would come, I warned ad nauseum, when inflation would return, and the Great Moderation would no longer be great.

That day is now at hand —and financial stability risks are now in the danger zone around the world. Yes, central bankers had an inkling that this risk should be taken more seriously; in the aftermath of the GFC, most major central banks started issuing periodic “financial stability reports,“ and the IMF now does the same on a global basis. This is not enough — it is a soft financial stability mandate, at best, and merely pays lip-service to the possibility of a major problem. The factors that determine financial stability — asset values, leverage ratios, and asset-related distortions to real economies — need to be made explicit and codified into formal, legally binding (i.e.., congressionally legislated), central bank mandates.

Moving from a soft to a hard financial stability mandate, without compromising existing price stability and full employment mandates, would be an important step in the direction toward a “multi-objective monetary policy” as sketched out Zhou Xiaochuan for China in 2016. While international coordination of a multi-target system would be desirable in theory, the practical possibility of that ever occurring is close to zero. That puts on the onus on individual central banks to address their own financial stability risks, while at the same time taking into account the potential global spillovers of their actions. Federal Reserve Vice Chair Lael Brainard’s recent speech at a New York Fed research conference is an important nod in this latter direction.

That poses one of the toughest questions of all —balancing multiple mandates with a single policy tool. Today, that means addressing the tradeoff between inflation control and financial stability; tomorrow, as unemployment undoubtedly rises, it may mean something else. Only central banks that are operating in a fashion that is truly independent of political pressures can be expected to tackle this tough issue with Volckeresque discipline and focus. “Keeping At It” won’t be easy – but in the end, it is the only way out.█

Stephen Roach is Senior Fellow, Paul Tsai China Center of the Yale law School and former Chairman of Morgan Stanley Asia. He is the author of the forthcoming book, Accidental Conflict: America, China, and the Clash of False Narratives (Yale University Press, November 2022).

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