Regional Research Key to Federal Reserve's Economic Decision-Making

The Federal Reserve System conducts extensive regional economic research through its 12 banks. This research is crucial to the Fed's broader mission of limiting inflation and promoting maximum sustainable employment, according to Jeff Thompson, director of the New England Public Policy Center at the Federal Reserve Bank of Boston.

The dual mandate of the Federal Reserve is to promote stable prices and maximum employment. To achieve this, researchers conduct both top-down and bottom-up approaches. Top-down research involves using models to understand high-level macro trends, while bottom-up research looks at the economy from a regional perspective.

Thompson explained that regional economic research fills critical data and information gaps, allowing the Fed to spot broad trends before they surface nationally. This is particularly important in regions like New England, which has unique characteristics such as an aging workforce, high education levels, and opioid abuse issues.