The ongoing feud between President Trump and Fed Chairman Jerome Powell centers on interest rates. This tells us more about the near-universal view of what constitutes monetary policy than it does about Trump or Powell. While Trump and Powell might quibble over the proper level for the Fed funds rate, they both think monetary policy is all about interest rates.

Trump and Powell aren’t alone. Today, central bankers organize monetary policy around the overnight interest rate set on reserves supplied by central banks. Indeed, nearly every central bank these days describes its stance on monetary policy in terms of its policy rate. It’s not surprising, therefore, that most bankers, market analysts, economists, and financial journalists also embrace the view that monetary policy is all about ce

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