|08:00||Bullard (FOMC non-voter)||On US economy and monetary policy|
|08:30||Chicago Fed NAI||Slightly below trend in January|
|10:00||New home sales||Partial reversal of December decline|
|10:30||Dallas Fed manufacturing survey||Slight pullback in headline index this month|
|11:00||4-week bill announcement||Likely unchanged at $55 billion|
|11:30||3- and 6-month bill auction||Steady at $52 billion and $45 billion respectively|
|15:15||Quarles (FOMC voter)|
At NABE policy conference
The Chicago Fed’s national tracking index may have dipped a bit below the long-run average of zero in January thanks to shortfalls in retail sales and industrial production. New home sales seem likely to rebound somewhat in January. The Dallas Fed’s regional factory index may pull back a little in February, but should remain quite healthy in absolute terms.
Today’s bill announcement: 4-week bills
Today’s bill auctions: 3- and 6-month bills
The Fed has a full analytical agenda ahead of it this year. There are longstanding questions about its communications strategy to consider, and a number of FOMC members are in favor of a fundamental rethink of the Fed’s flexible inflation targeting framework. This week’s MMO focuses on a narrower technical issue. We think the optimal long-run size of the Fed’s balance sheet is much larger than generally assumed in baseline simulations. We see no reason for the Fed to push bank reserves below $1.5 trillion, which is a level that is likely to be reached within the next year. It is not too early for the FOMC to begin to focus on the question of what the stopping point for balance sheet normalization should be.