Author: Derek Tang

Governor Powell was the first FOMC participant to weigh in on the effect of Brexit on the outlook. Other participants’ remarks did not add much beyond what he said. He noted that Brexit added new headwinds and new uncertainties and had resulted in a modest tightening of U.S. financial conditions so far, but that it […]

Last week’s data did not affect our views about the outlook for monetary policy. But the financial repercussions of Brexit did. This week we will make a preliminary judgment about how much the worsening of financial conditions, if sustained, might affect our forecast for growth and inflation. Given that the effect will be to slow […]

The dots did the talking last week, not the statement (link). The dots showed a dramatic change in sentiment about the likely path of the funds rate. While the median still implied two hikes in 2016, the distribution changed dramatically, with fewer projecting more than two hikes and many more projecting only one. There was […]

The dots did the talking last week, not the statement (link). The dots showed a dramatic change in sentiment about the likely path of the funds rate. While the median still implied two hikes in 2016, the distribution changed dramatically, with fewer projecting more than two hikes and many more projecting only one. There was […]

There was a rush for FOMC participants to get their talks and remarks out before blackout. That meant a talk and remarks even on a Saturday (Mester), and four last Monday, by Rosengren, Lockhart, Bullard, and, most notably, Yellen. Blackout began before the Michigan survey came out so we will be monitoring closely for discussion […]

Anything said before the employment report is already dated and not very informative with respect to the prospects of a June or July hike, with an important exception. What remains relevant is what was said about Brexit. In our view, Brexit had already pretty much taken June off the table. And the outcome of the […]

A strong consensus has emerged for a rate hike in the near term, most likely by July, and June is clearly on the table. Many participants have said that at least two hikes would likely be appropriate this year if the economy performs as expected, and quite a few have said two or three hikes […]

The story last week was the FOMC minutes and comments from Williams, Lockhart, and Dudley. The data were a sideshow. The minutes indicated that the sentiment of the Committee was much more hawkish than appeared to be the case from reading the April statement and listening to the April press conference. The message was that […]

There were only two speeches last week, by Lockhart and Bullard, but there were public comments from a total of six FOMC participants. There was a contrast between Williams and Lockhart that likely reflected two camps on the Committee. Bullard is, we suspect, in a camp of his own. Williams said he would support a […]

In the only speech of the week, Kaplan said he believed output would improve over the rest of the year. He said that he “will advocate that we take actions to remove some amount of accommodation.” He echoed this view in an interview later that day: “We need to reconcile GDP data with job data. […]