FOMC Watch

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A good example from today´s speech by Philly Fed president Patrick Harker: Growth for 2017 so far is more or less what we expected. The first quarter was relatively weak, which has been the case for first quarters over the past several years. That’s what we’ve come to expect at this point, so it’s not

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In a speech today, New York Fed president Dudley, following Yellen´s press conference last Wednesday suggested that current levels of unemployment and inflation were a “pretty good place to be”! He also felt that the US economy was “close to full employment” and, despite inflation being a “little lower than the Fed would like”, he

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The Fed´s overriding commitment: “Normalization”

Narayana Kocherlakota put it well yesterday: The U.S. Federal Reserve’s two main goals are to promote maximum employment and keep inflation close to 2 percent. But it also acts as if it has another, unspoken mandate: Don’t do anything too radical in pursuit of those goals. This allegiance to what’s considered “normal” harms a lot

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Minutes from FOMC Meetings are a fantasy!

From Participants’ Views on Current Conditions and the Economic Outlook: Although the incoming data showed that aggregate spending in the first quarter had been weaker than participants had expected, they viewed the slowing as likely to be transitory. They continued to expect that, with further gradual adjustments in the stance of monetary policy, economic activity

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Stanley Fischer argues for Central Bank Discretion

In a speech yesterday, Fischer says: Today I will offer some observations on monetary policy rules and their place in decision-making by the Federal Open Market Committee (FOMC). I have two messages. First, policymakers should consult the prescriptions of policy rules, but–almost needless to say–they should avoid applying them mechanically. Second, policymaking committees have strengths that

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The FOMC Statement for May showed up some contradictions in Fed policy. They have made it clear that they think the economy is growing modestly above trend. Hence, we still get rate rises, projections for more rate rises, plus the chatter about shrinking the balance sheet. The Fed really do seem to be watching RGDP on an

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From the News: Don’t bet on the Federal Reserve blinking again. U.S. central bankers appear to be on course to raise interest rates twice more this year and remain confident in their forecast for growth of around 2 percent despite a series of weak first-quarter reports. That’s a shift from past performance, when they backed

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The president of the NY Fed really is the main man. Last week he surprised us by not elaborating on the Fed’s supposed disappointment with the market’s positive reaction to the rate hike in March. Instead, he expanded on a new idea on the importance of “financial conditions” in setting monetary policy. While he claimed with no

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Ever since the Fed raised rates in March and rumors swirled that it was unhappy with the market’s dovish response we had been expecting the FOMC to “correct” the market. Last week, Bill Dudley, the markets’ man from the NY Fed neglected to do this in his important speech – and the markets noticed the absence. Therefore, we did

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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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