LHMeyer/Monetary Policy Analytics
Policymakers are now nearly unanimous in supporting a December hike, but the pace in 2018 remains an open question. Their comments suggested the center of the FOMC is still at three hikes in 2018, consistent with the September median projection. Williams concurred on that point, but has a lower estimate of the longer-run funds rate […]
The blackout period on policymaker remarks ended after the release of the FOMC statement on Wednesday. Kashkari commented specifically on the impact of Powell as Chairman: “I think he’s a very serious, thoughtful policymaker. So I’m not anticipating the transition from Chair Yellen to Chair Powell will lead to a big change in the […]
The market is eagerly awaiting the President’s decision on Fed Chair. We wrote about the White House’s criteria and our assessment. (See Checking the Boxes: The White House’s Criteria for Fed Chair.) Policymakers’ Comments Low inflation was cited as a reason to let labor market improvement continue. Williams said: “A couple more years of roughly 4 […]
The usual split among policymakers concerning a December hike remained. This weekend, Yellen declared that the FOMC continues “to expect that the ongoing strength of the economy will warrant gradual increases in that rate to sustain a healthy labor market and stabilize inflation around our 2 percent longer-run objective.” Although she acknowledged that recent inflation […]
A number of policymakers continued to prefer a rate hike in December. The key argument among those supporting a hike was the need to preempt the risk of overheating and a subsequent need for more-rapid tightening. For instance, Rosengren called for “prudent risk management” and warned, “failing to respond to very tight labor markets with […]
We saw Yellen’s speech last week as consistent with our (close) call that the FOMC will raise rates in December (See Message from Yellen: Steady Hand, But Alert to Inflation Developments). Her remarks indicated that there is a solid consensus on the FOMC that the recent slowing in core PCE inflation is due principally to transitory […]
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 […]
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, […]