Category: Weekly Update

Many participants had already emphasized that March was on the table, but markets remained skeptical. How would the FOMC build in high enough expectations to allow it to hike in March? The answer was easily and quickly: five talks gradually raising the probability, culminating in Yellen, speaking for both herself and her colleagues, unequivocally saying […]

The FOMC minutes last week supported our assessment that the odds of a March hike had increased. We have consequently boosted the probability of a March hike from 33% to 40%. If events evolve as we expect, the minutes suggest to us that the FOMC will cross the threshold for action by May; we put […]

The pace of rate hikes this year continued to be a central topic for policymakers. Dudley said the FOMC “would expect to gradually remove further monetary policy accommodation, snug up interest rates a little further, in the months ahead.” He also noted that “it’s really hard to factor [fiscal policy] into your forecast at this […]

FOMC participants were quite talkative last week, commenting on topics including Fed balance sheet policy, the role of policy rules in informing decisions on policy rates, and of course the economic outlook, including how they would approach normalizing rates in an environment of heightened fiscal policy uncertainty. Governor Tarullo also revealed publicly that he will […]

Evans said, given the way the data are going, he could be comfortable with three hikes. As we have said, while he was at two hikes, he was nevertheless on the edge of three. Williams reiterated he is at three hikes, but also put a March hike on the table, as part of the three.  […]

Last week saw little communication from FOMC participants because of the pre-meeting communications blackout. Lacker appeared on a radio interview, sharing his concern that “right now, I think we’re at risk of getting behind the curve.” He wanted to increase the funds rate “a little more aggressively than the rest of my colleagues.”

The most noteworthy policy speech last week was Yellen’s remarks at Stanford. For our detailed perspective, click here for our discussion. Her speech reinforced our view that she currently sees three hikes as the appropriate pace for 2017. Once again she provided an optimistic assessment of the current state of the economy, progress made over […]

FOMC participants saw the economy as close to meeting the dual mandate objectives. With moderate growth likely ahead, they saw a need to raise rates in 2017. Moreover, with the economy close to full employment and price stability, they suggested they would respond to fiscal stimulus by tightening monetarypolicy more, to keep the labor market […]

The minutes of the December 2016 FOMC meeting were published on Wednesday [link to commentary]. The most important message in the minutes was that, while there was uncertainty about the timing, size, and composition of the fiscal stimulus to come, there was not such uncertainty about the monetary policy response: raise rates more than otherwise […]

FOMC policymakers gave no speeches between Christmas and New Year’s. Governor Powell will speak on “Low Interest Rates and Financial Markets” on Saturday. Presidents Kaplan, Lacker, and Evans will also speak on topics related to the outlook and monetary policy this week.