FOMC Watch

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The FOMC pounced two weeks ago, today it stepped back

Two weeks ago in a synchronized procession the important members of the FOMC, from Dudley to Brainard to Yellen and Fischer, let it be known that they would raise rates today.  They did. What they did not do was significantly raise their projections for the economy or for the path or rate rises. They did

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Weak foundations for Fed tightening bias

New York Fed William Dudley set the “foundations” for the tightening scenario. Dudley:  “Since the election we’ve seen very large increases in household and business confidence, we’ve seen very buoyant financial markets — the stock market is up, credit spreads are narrow. And we have the expectation that fiscal policy will probably move in a more

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Yellen confirms: Monetary Policy is not subject to lags, and interest rates do not define the stance of policy.

Yellen starts off: I will spend most of my time today discussing the rationale for the adjustments the Committee has made since 2014, a year that I see as a turning point, when the FOMC began to transition from providing increasing amounts of accommodation to gradually scaling it back. That´s true. However, two paragraphs later,

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Vice Chair Stan Fisher on “Committee & Rules” based decisions

In conclusion: My take is that rules are extremely useful reference tools, but they are likely to work best as inputs into a committee decision. Why? Let me reiterate some points I made in Warwick. First, the economy is very complex, and models that attempt to approximate that complexity can sometimes let us down. A

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Brainard not going to allow an economy to run hot, shame

As Market Monetarists, we think the Fed should be guided by the market’s view of nominal growth expectations. Unfortunately, there is no market in nominal growth expectations. We devised a market-influenced forecast for NGDP growth 12 months into the future as a sort of proxy for the market price. It has been rising steadily since

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Now Dudley: We have seen a “very large” rise in household and business confidence and “very buoyant” financial markets since the election, “and we have the expectation that fiscal policy will probably move in a more stimulative direction,” he said on CNN. “The case for monetary policy tightening has become a lot more compelling,” added Dudley,

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Words matter

Kaplan joins Harker and Williams: Kaplan repeated his view that he would prefer the Fed to move “sooner rather than later,” but without explicitly calling for a rate increase next month. “We want to guard against a situation where we get behind the curve” on inflation, he said. Helped by Kaplan´s words, now the markets

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The Minutes

Minutes Given recent manifestations, like Yellen´s Congressional Testimony last week, maybe the markets expected some confirmation about the Fed´s rate timetable. Markets were disappointed on that regard. Yields and the dollar moved down. So, somewhat surprisingly, did stocks. Interestingly, four years ago exactly, Yellen was worried about “The painfully slow recovery”. We can now see

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In “Looking back, looking ahead” Williams concludes: Although it has been a long, hard road back from the recession, the American economy is in good shape and headed in the right direction. We’ve reached our employment goal, and inflation is well within sight of and on track to reach our target. Given the progress we

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Harker today on the economy: Labor market Things are looking pretty good. Inflation Moving on to inflation, we’re seeing positive upward movement, although PCE remains below our 2 percent target. Headline and core PCE closed out last year at 1.6 and 1.7 percent, respectively. That’s a world of improvement over the end of 2015, when

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