Monetary Policy on the Menu at CASI Luncheon

Over the past six months, sky-high inflation and rapid interest rate hikes have brought the Federal Reserve System into the news nearly every day. But the central banking system of the United States is a mystery to many people. GSB students have questions about how the Fed works, who makes decisions, and what it means for businesses and society.

CASI was pleased to host former Federal Reserve Governor Kevin Warsh for lunch with over 40 students on January 17th. It was a rare opportunity for MBA students to hear what goes on behind the scenes at the Fed.

"It was insightful to learn the Fed’s process of decision-making and economic research, and how they both expand and restrict their policies," said Yukiho Ishigami, a first-year MBA student.

Warsh served as a member of the board from 2006 to 2011. Over lunch, he talked about a range of issues facing the Fed, including the current debt ceiling crisis. While the political rhetoric has grown more heated, he believes it will end up where it always does, with Congress raising the debt limit and the US avoiding default. But, Warsh sees dangers ahead in other areas, such as digital currencies. He told the group that China’s recent launch of a central bank digital currency could ultimately threaten the dominance of the US dollar. Warsh believes the US needs to do more to lead the digital currency revolution by improving incentives for innovation and competition in its own payment systems.

Warsh’s in-depth knowledge of the Federal Reserve and the powerful role that central bankers play in the US economy was greatly appreciated by the lunch attendees.

"No matter where their careers take them, GSB students will need a strong understanding of why the Fed's decisions matter," said Oren Fliegelman, a second-year MBA/MS student who organized and moderated the event. "Students were excited to get a peek inside."