Author: Derek Tang

All the speakers last week—Jim Bullard, Charlie Evans, John Williams and Patrick Harker—supported a December rate hike, though only Williams and Harker set out a strong case for doing so. Still, all four are part of the strong consensus for a hike in December. Bullard and Williams noted that, while the increase could come in […]

In a discussion of low interest rates, Fischer pointed to secular forces holding down interest rates (such as aging of the population, low productivity growth, and weak investment). This could make setting monetary policy more difficult by increasing the frequency that the FOMC faces the effective lower bound and could threaten financial stability by promoting […]

Some speakers favored a move this year because of the proximity to full employment and the risk of having to go faster later if the FOMC does not raise rates soon; others said that, while they believed the economy has running room, they still supported one hike this year. Their arguments were conditional on the […]

Both the patient and ready-to-go camps were well represented in remarks by participants over the last week. Those in the patient camp continued to advocate a cautious approach to raising rates, but one member of that cohort, Evans, signaled that he might be prepared to support a hike in December. This is what we have […]

As far as Fed communication, it was mostly more of the same from the ready-to-go and patient camps last week. There is nevertheless more agreement on what each camp sees as the more important issue for the Committee, and it is about pace: slow, very slow. Many FOMC participants shared their views on monetary policy […]

The three official dissents to the decision by the Fed to keep interest rates unchanged last week revealed the intensity of the split on the Committee between the ready-to-go camp and those who counsel patience. As a result, it was no surprise that outspoken policymakers on each side of the debate made their case immediately […]

Last week, the doves had the floor to themselves, for a change, and Brainard, Kashkari, and a new  dove, Lockhart, spoke just before the pre-meeting blackout took effect on Tuesday and before the weaker-than-anticipated data on retail sales were released. Brainard gave a forceful presentation of the dovish argument for continued accommodation, focusing on the […]

Not much data, but the markets were on edge about a September rate hike, and equities fell sharply, reportedly spurred by remarks by Rosengren that we, at least, have heard before. Another factor that put markets on edge was the announcement that Governor Brainard would give public remarks and participate in a panel discussion today. […]

Lacker and Evans offered contrasting views of the implications of simple policy rules. Lacker drew support for a more rapid pace of normalization from Taylor rules that suggest that the funds rate should be “should be significantly higher than it is now,” centered between 1.5% and 3.3%. That apparently depends of the specific policy rule, […]