LHMeyer/Monetary Policy AnalyticsFed Not Ready to Declare Mission Accomplished on Inflation Bloomberg News on Apr 30, 2018 Former Fed Governor Laurence Meyer said that will confront the central bank with “a balancing act” in setting monetary policy in response. “You can’t go so fast that you’re going to threaten the expansion but you’ve got to go fast […]
Kevin Burgett Last week, Richard Clarida was nominated to be Vice Chairman of the Board (Clarida: Completing the Troika). He has questioned participants’ projections of an unemployment rate falling further below the NAIRU without inflation overshooting the 2% objective and the funds rate moving above its neutral level. While participants’ projections moved in this direction […]
Powell’s Fed Bets on Running a Hot Economy Without Overheating Bloomberg News on Apr 25, 2018 Fed officials are “taking a risk, or rather it has been taken for them because of badly timed fiscal stimulus,” said former Fed Governor Laurence Meyer, who runs a policy research firm in Washington. “They can’t prevent an overshoot, […]
While Chairman Powell speech (4/6) on the economic outlook was the highest profile of public remarks by monetary policymakers last week, his evenhanded remarks were clearly intended to avoid any market response, and they didn’t change our view of the outlook for monetary policy (see our commentary). His description of the balancing act the FOMC faces […]
Several policymakers addressed the outlook last week, and we look forward to Chairman Powell’s speech on the economic outlook this Friday. President Bostic (3/28) said, “the inflation measures we are looking at are trending toward 2 percent. The evidence is more there than some may understand. Let’s get back to neutral.” As other policymakers have […]
As we wrote last week, the March FOMC statement, macro projections, dots, and press conference together showed an FOMC that has clearly become more optimistic about the outlook. (See our notes on the statement and projections and the press conference.) The revisions in the latest projections brought their macro outlook much more in line with ours. The FOMC […]
Last week’s incoming data provided further evidence of firming inflation but also led to further downward revisions to estimates of Q1 growth. The CPI and PPI data for February suggest that core PCE prices likely increased a solid amount as well and that the 12-month rate will be reported as having increased to 1.6%. We […]
Governor Brainard gave a speech last week reflecting what we see as a general shift on the FOMC, and we expect her dots next week will be marked up (see our commentary). Policymaker Remarks A number of policymakers warned of inflationary or financial imbalances unless the FOMC accelerates rate hikes beyond the presumed (median) pace. […]
The major monetary policy event last week was Powell’s inaugural semiannual testimony as Fed Chair before Congress. In his remarks, he avoided providing any explicit guidance on the likely pace of rate hikes. However, he characterized the outlook as strong and having improved since the December meeting, which suggested that a faster pace is more […]
Policymakers continued to diverge on the pace of rate hikes they saw as appropriate for this year. Williams (Feb. 23) thought “it makes sense to think about three to four” as he cited overheating risk. He saw the neutral rate as having risen as a result of fiscal policy decisions: “I still think we’re in […]