LHMeyer/Monetary Policy Analytics
In addition to Chair Yellen’s press conference on behalf of the FOMC (see Chair’s Press Briefing: Reiterating the Message in the Statement and Projections), several policymakers shared their views of recent inflation developments. Chair Yellen argued in last week’s press conference that “this year, the shortfall of inflation from 2 percent, when none of [the headwinds […]
Rules Reign on Trump’s Fed List as Post-Crisis Economy Breaks Them Bloomberg News on September 14, 2017 “Thinking through the transmission of monetary policy to inflation is high on the agenda” for the next Fed regime, said David Stockton, the Fed’s chief economic forecaster under former chairmen Alan Greenspan and Ben Bernanke. … “The notion […]
Governor Brainard recently set out the intellectual case for caution about a December hike (9/5). The key consideration will be the assessment of the underlying inflation rate at that point (see What Will It Take to Raise Rates in December?). Most other FOMC participants are also in a wait-and-see posture, based on their uncertainty about what […]
Governor Brainard warned that “we should be cautious about tightening policy further until we are confident inflation is on track to achieve our target.” She cited uncertainty about the Phillips Curve–“in today’s economy, there are reasons to worry that the Phillips curve will not prove very reliable in boosting inflation as resource utilization tightens”–an issue […]
While Yellen did not comment on monetary policy or the economic outlook, several other FOMC participants offered their views on the prospective pace of rate hikes. More-hawkish policymakers continued to stress that the FOMC should not wait until inflation reaches its objective before moving again: Mester noted that “inflation is not yet at 2 percent, […]
FOMC participants continued to share divergent views on the prospects of a third rate hike this year. Fischer described the division of views on how to respond to recent inflation readings: “There will be arguments on both sides on this thing. I’m not sure where that discussion is going to end up. This continuation of […]
Economy Parties a Bit Like 1999 as Yellen Heads to Jackson Hole Bloomberg News on August 23, 2017 “There are a lot of similarities,” between the late 1990’s and today, said Laurence Meyer, who was a Fed governor from 1996 to 2002 and now heads his own Washington-based consulting firm.
Policymakers continued to disagree on how the FOMC should react to incoming inflation data. A few policymakers pointed to technological change as a structural factor exerting downward pressure on inflation. Kaplan argued that technology has limited the pricing power of businesses. Bullard noted that “Technology prices have been dropping for a long long time. The […]
Comments from Fed policymakers were consistent with our expectation that the balance sheet runoff announcement will be in September but the next rate hike will not come until December. Williams wrote in his speech that it would be appropriate to start unwinding the balance sheet “this fall.” He thought that the September meeting would be […]
The blackout period on Fed policymaker remarks ended after last week’s FOMC meeting. Kashkari commented on the relationship between the timing of the next rate hike and the announcement of balance sheet runoff. Kashkari believed that the balance sheet “isn’t doing a lot to boost the economy right now,” while with respect to the […]