LHMeyer/Monetary Policy AnalyticsAs war in Europe continues, some U.S. competitors have ramped up rhetoric about alternative currency regimes that do not center around the dollar. New data continue to pour cold water on this hope. We recently wrote a commentary on de-dollarizaion for the original thematic analysis. To read more of this piece or our de-dollarization analysis, […]
Situation. Powell previewed the reduction of the balance sheet with passive runoff, using caps that phase in. But it is unclear if the FOMC will be able to shrink it in time. A downturn that necessitates zero funds rate and QE could hit before the three-year mark; the risk of that outcome grows with the […]
1. Runoff. In keeping with greater upside risk to the glide path, we see greater risk of an earlier and more-rapid runoff. Our base case is still a July start with ~$100bn/mo caps. The hawkish case is an earlier start and caps maxing out at higher, like $120bn/mo. A reduction of more than $1tn, e.g. […]
Overview The Fed’s balance sheet remained above $7.4tn as the NY Fed frontloaded the fortnight’s asset purchases before the holidays.
1) Overview. See our FOMC Briefing for views on Wednesday’s meeting. The Fed’s balance sheet was little changed at $7.2tn.
1) SEP. The FOMC will add two new charts to “show how the balance of participants’ assessments of uncertainty and risks have evolved over time.”
There are two, seemingly conflicting, themes in the FOMC’s current narrative about policy today and going forward. First: More monetary policy action will be needed.
The Fed’s new Strategy Statement and FOMC statement forward guidance has left open some key questionsabout execution. I explore some issues below and invite you.
It’s easy to see the attraction of make-up strategies. First, they allow for greater stimulus at the effective lower bound (ELB) because policymakers are committed
Fed Staff Research Signals Unease About Ignoring Unemployment Drop Wall Street Journal on August 24, 2018 “The paper…provides intellectual support for the Fed to continue on its policy path, said Derek Tang, an economist at LH Meyer Inc., an economic-forecasting firm.”