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2014 Faculty Perspective on the Federal Reserve

With change at the helm of the Federal Reserve and a pre-announced reversal in monetary policy, 2014 will certainly not be boring. Janet Yellen, who succeeds Ben Bernanke this January and will serve as the first woman to lead the Federal Reserve, faces multifaceted monetary policy challenges, says Davide Accomazzo, an adjunct professor of finance at Pepperdine University’s Graziadio School of Business and Management. Ms. Yellen will oversee the tapering or unwinding of the Fed’s quantitative easing program by reducing its monthly bond-buying campaign to $75 billion. It will be interesting to see how fast Ms. Yellen will continue to tighten monetary policy and how she will ease commercial banks and other private institutions off the long-term assistance to which they have become accustomed, anticipates Professor Accomazzo. Economic and monetary policies are beginning to differ globally and Mr. Accomazzo predicts that the days of volatility are about to return. Managing a smooth transition into more normalized organic economic growth will be key to sustaining improved economic activity and labor market conditions.