September 29, 2017

How long does “temporary” or “transitory” last?

Yellen has made her position (shared by others at the FOMC) clear: First, she is somewhat puzzled by the inflation data. Second, that bewilderment will not deter them from keeping to their established “hike path”. Interestingly, two years ago she delivered a speech, which was all about inflation, in fact setting the foundation for beginning the “tightening” cycle, the first move of which took place three months later, in December, and was almost immediately temporarily “aborted” (remember Stan Fischer´s “4 rate hikes for 2016?) Highlights from the speech: “Inflation Dynamics and Monetary Policy” Policy Implications Assuming that my reading of… Read More


NGDP Forecast Update: Holding Above 4%

Despite all the headlines and data releases in September, the near-term outlook held quite steady since our last update, with the latest reading for our 2018Q3 NGDP forecast around 4% after rounding. This means the economy is set to be a little less “cool” in 2018 than 2017, but not by a whole lot. There’s been a tiny drawdown, about 0.05 percentage points since last week, but such a small move is “decimal dust” in the world of macro, and is really only noticeable because the forecast was glued to 4.1% for most of the month. New GDP and Gross… Read More