LHMeyer/Monetary Policy Analytics
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 […]
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 […]
In her testimony, Yellen continued to argue that “it’s premature to conclude that the underlying inflation trend is falling well short of 2 percent. I haven’t reached such a conclusion” (7/13). She saw inflation risk as being “two-sided,” citing not only the recently low inflation numbers but also a labor market that is quite tight […]
The prospect of fiscal policy changes continued to be a key factor in policymakers’ thinking about monetary policy. The FOMC minutes revealed that less than half of participants incorporated assumptions of fiscal stimulus in their June economic projections. Bostic noted that: “We’re going to let the Congress do what the Congress is going to do, […]
Several policymakers drew attention to financial stability concerns last week, although they concluded that the current situation warrants monitoring rather than any immediate action. Yellen noted that “Asset valuations are somewhat rich if you use some traditional metrics like price earnings ratios, but I wouldn’t try to comment on appropriate valuations, and those ratios ought […]
FOMC participants continued to hold divergent views of inflation prospects and the implications for the timing of further rate hikes. Williams saw inflation as being pulled down by “transitory factors” and focused on the overheating risk posed by what is a “very strong” labor market as suggested by U-3 being below the NAIRU by “a […]
Following the June FOMC meeting, several policymakers shared their views on Fed policy. Dudley justified the June rate hike as appropriate to avoid a scenario in which the FOMC waited too long to tighten and would then have to “slam on the brakes.” He thought that tightening should be performed “very judiciously” to “sustain” the […]
Policymakers’ continued to have different views on the implications of recent inflation data for the pace of normalization. However, policymakers were generally hopeful that a labor market that was continuing to strengthen would eventually contribute to inflation firming toward its objective. Harker dismissed concerns about recent softness as “unwarranted” and maintained his expectation for three […]