LHMeyer/Monetary Policy Analytics
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 […]
Powell’s swearing-in remarks (2/13) were typical for an incoming Chairman. He reiterated the importance of Fed independence: “Congress has wisely entrusted us with an important degree of independence so that we can pursue our monetary policy goals without concern for short-term political pressures.” As for current conditions, he noted that “Monetary policy has continued […]
The volatility in financial markets captured the attention of a number of policymakers. On Wednesday (2/7), Dudley said stock market developments had “no consequence” on his economic forecast and didn’t think “it’s a big story at all for central bankers.” He said it would become a factor if it continued to fall sharply, noting, “It’s […]
The debate on the number of hikes in 2018 suggests the consensus sees upside risks to the December median projection of three. Williams said either three or four hikes was “still reasonable” (Feb 2). Kaplan appeared to emphasize the upside risk to his baseline of three hikes this year: “If there’s a likelihood that I’m […]