Eric Swanson, UCI economics professor and Brian Sack write, “Monetary policy is transmitted to the broader economy by affecting financial conditions more generally, including the longer-term interest rates at which businesses and households borrow, the exchange value of the dollar, and the prices of key assets such as equities and real estate. It is thus import to assess how these broader financial conditions are affected by the Fed’s monetary policy decisions. The purpose of this post is to measure that effect and summarize it with a simple benchmark that should prove useful both for assessing the stance of monetary policy and forecasting economic activity.”

Continue reading: https://www.brookings.edu/articles/the-impact-of-federal-reserve-policy-on-the-feds-financial-conditions-index/.