Following the employment report on Friday, Williams said the release “was overall consistent [with] above-trend job growth.” On GDP, he noted that “we’re in a great place; the economy is doing well…It’s nice to see further confirmation that that first quarter GDP number was an aberration.” He noted later on that “our estimates tend to […]
Author: Derek Tang
Even as the incoming data have suggested that growth slowed substantially in the first quarter—to a 1% rate, in our estimation—policymakers have maintained that the economy is in a good position and that a gradual pace of rate hikes remains appropriate to meet the dual mandate objectives. Policymaker Communications Policymakers continued to agree that a […]
In recent weeks a very strong consensus had formed that the economy was on track, with the labor market essentially at full employment and price stability appearing to be in reach. Almost all FOMC participants agreed that a gradual pace of rate hikes was appropriate. FOMC participants appear inclined to look through the apparently weak […]
Views on the appropriate timing of a change in reinvestment policy ranged from sometime this year to early 2018. Participants generally expressed views more consistent with the “later this year” timing suggested in the March FOMC minutes. Williams said it makes sense for balance sheet normalization to begin toward the end of the year, with […]
Debate continued on the evolution of the Fed’s balance sheet. Kaplan reiterated the general stance of the FOMC, which wants “the interest rate to be the primary vehicle, the primary tool we use for monetary policy.” He observed that “actions on the balance sheet have some effect, but I think we want to center our […]
Last week, President Dudley defended the FOMC’s decision to raise rates in March as appropriate as part of the FOMC’s strategy of normalizing rates: “By taking out a little bit of that accommodation—moving up interest rates just a little bit—we think it’s more likely we’ll achieve a soft landing, and keep the economy about where […]
A few FOMC participants have already restarted the conversation about monetary policy following the March meeting. President Kashkari explained his dissent at the March meeting: “The data are basically moving sideways, so I’m asking, what’s the rush to raise rates?” He seems to be one of the few remaining members of the “patient” camp. Others […]
Many participants had already emphasized that March was on the table, but markets remained skeptical. How would the FOMC build in high enough expectations to allow it to hike in March? The answer was easily and quickly: five talks gradually raising the probability, culminating in Yellen, speaking for both herself and her colleagues, unequivocally saying […]
The FOMC minutes last week supported our assessment that the odds of a March hike had increased. We have consequently boosted the probability of a March hike from 33% to 40%. If events evolve as we expect, the minutes suggest to us that the FOMC will cross the threshold for action by May; we put […]
The pace of rate hikes this year continued to be a central topic for policymakers. Dudley said the FOMC “would expect to gradually remove further monetary policy accommodation, snug up interest rates a little further, in the months ahead.” He also noted that “it’s really hard to factor [fiscal policy] into your forecast at this […]