wricaplogo

Keyword Search

RETURN

Categories

Recent FedSpeak Highlights

  • Loretta J. Mester "My path may be a little bit above the consensus path."

    [ November 16, 2016 ]

    "My path may be a little bit above the consensus path," Mester said of expected rate hikes. "The economy is getting back to both parts of our goals (so) it just seems appropriate to start moving rates up," she said, referring to the Fed's inflation and employment targets.

  • Neel Kashkari In Step 2 of the Minneapolis Plan, we reduce the risk of a future crisis and bailout to as low as 9 percent. Again, the added safety isn’t free. The total cost is as high as 41 percent of GDP, which is much higher than current regulations, but still much smaller than the cost of a financial crisis.

    [ November 16, 2016 ]

    Finally, in Step 2 of the Minneapolis Plan, we reduce the risk of a future crisis and bailout to as low as 9 percent. Again, the added safety isn’t free. The total cost is as high as 41 percent of GDP, which is much higher than current regulations, but still much smaller than the cost of a financial crisis.

  • James Bullard “A single policy rate increase, possibly in December, may be sufficient to move monetary policy to a neutral setting.”

    [ November 16, 2016 ]

    In terms of the macroeconomic outlook, “the near-term St. Louis Fed forecast remains unchanged as of today,” Bullard said, adding, “our outlook for monetary policy is also unchanged.” He noted that U.S. unemployment is effectively at the FOMC’s estimate of its long-run level, while U.S. inflation is low but close to the FOMC’s 2 percent target and rising. In addition, safe real rates of return are low and are not expected to change.

    “A single policy rate increase, possibly in December, may be sufficient to move monetary policy to a neutral setting,” Bullard said.

  • Daniel K. Tarullo The discussion of when is the appropriate moment for raising rates in order to prevent the economy from overheating too much is now, from my point of view, more on the table than it may have been before.

    [ November 15, 2016 ]

    “The discussion of when is the appropriate moment for raising rates in order to prevent the economy from overheating too much is now, from my point of view, more on the table than it may have been before,” Tarullo said Tuesday at an economic and political forum in Washington, adding, “I still think there are grounds for caution.”

    ...

    Tarullo pointed to upward ticks in inflation and core inflation, the latter of which rose to 1.7 percent in the 12 months through September, according to the Fed’s preferred gauge of price pressures. He also cited the expanding work force and increasing wages. “All of that is suggesting to me that we’re in a somewhat different situation than at least I thought we were in six or eight, 10 or 12 months ago, where I thought we had more opportunity to create more jobs, get more production in the country” by keeping rates low.

  • Eric Rosengren I felt that the changes in the [November] FOMC statement were well aligned with the notion (and the market perception) of a high likelihood of tightening in December. As a result, I did not dissent.

    [ November 15, 2016 ]

    At the September FOMC meeting, I voted to increase interest rates, arguing that if we waited too long to raise rates we could place at risk the sustainability of the recovery. I was concerned that waiting could risk the need to raise rates faster and more than desired at some point, and I felt that this was a risk that could be reduced by removing a bit of accommodation earlier. At the FOMC meeting earlier this month, however, I felt that the changes in the FOMC statement were well aligned with the notion (and the market perception) of a high likelihood of tightening in December. As a result, I did not dissent.

  • Eric Rosengren Since the unemployment rate is already close to its full employment level, further declines would increase the risk of overshooting what is likely to be a sustainable unemployment rate in the longer run. That outcome could lead at some point to the need for a more rapid removal of monetary policy accommodation.

    [ November 15, 2016 ]

    It is certainly good news that the labor force has grown more rapidly of late, and that workers have been drawn from out of the labor force into employment. But this trend is likely to be limited going forward by the demographic changes in the workforce. As a result, if the economy grows even somewhat faster than potential, as most forecasters are expecting, the corresponding increases in employment are likely to be accompanied by further declines in the unemployment rate. Since the unemployment rate is already close to its full employment level, further declines would increase the risk of overshooting what is likely to be a sustainable unemployment rate in the longer run. That outcome could lead at some point to the need for a more rapid removal of monetary policy accommodation.

  • James Bullard You would have to have a surprise at this point to stop a December rate hike.

    [ November 15, 2016 ]

    "You would have to have a surprise I think at this point" to stop a December rate increase, Bullard told reporters after the speech.

  • Stanley Fischer I think many members of Open Market Committee and Federal Reserve Board have commented that it would be useful to have a more expansionary fiscal policy. These statements were made over several months recently. I'm on record with that as having believed that.

    [ November 11, 2016 ]

    I think many members of Open Market Committee and Federal Reserve Board have commented that it would be useful to have a more expansionary fiscal policy. These statements were made over several months recently. I'm on record with that as having believed that.

  • Stanley Fischer In my view, the prospects of a continued steady expansion in the U.S. economy are maximized to the extent that we proceed with a gradual removal of accommodation.

    [ November 11, 2016 ]

    Fischer said the Fed was "reasonably close" to achieving its employment and inflation goals, and the case for tightening monetary policy "quite strong" as a result.

    "In my view, the prospects of a continued steady expansion in the U.S. economy are maximized to the extent that we proceed with a gradual removal of accommodation," Fischer said. He added not doing so runs the risk of having to tighten more abruptly later on.

  • James Bullard I conclude that a single 25-basis-point increase in the policy rate—from 38 to 63 basis points—will get us very close to the recommended Taylor rule value over the forecast horizon.

    [ November 10, 2016 ]

    I conclude that a single 25-basis-point increase in the policy rate—from 38 to 63 basis points—will get us very close to the recommended Taylor rule value over the forecast horizon.

  • John Williams "We do want to run a hot economy for a while (but) we don’t want it to be too hot for too long."

    [ November 9, 2016 ]

    "It makes sense, I would say, to ease off on the gas a bit," Williams said. "We do want to run a hot economy for a while (but) we don’t want it to be too hot for too long."

  • Charles L. Evans “I am worried that inflation expectations have been moving down in a way that’s not consistent with 2 percent.”

    [ November 8, 2016 ]

    “We’ve finally gotten core PCE inflation of 1.7 percent,” he told the Council on Foreign Relations in New York Tuesday. “We’re close, we’re getting there, and if I had even more confidence about getting to 2 percent I’d feel better about monetary policy re-normalization. We’ll see how that goes.”
    ...
    Evans, who will vote on the FOMC next year, said there were reasons to “have not quite as much confidence that we’re going to get to 2 percent and we’re going to get there quickly,” chief of which was expectations.

    “I am worried that inflation expectations have been moving down in a way that’s not consistent with 2 percent,” he said. The way to change that was to assure the public the Fed would meet its goal and “in order to do that, we’re not going to pull back too quickly,” he said.

    “I’m probably the only FOMC participant who uses the word ‘overshooting’ in their speeches for inflation,” Evans said. “I don’t think it’s a crime if we were to overshoot.”

  • Robert S. Kaplan I don’t see the economy running away from us because of [broader] secular forces. I think we have to understand that near the zero lower bound that it’s a lot easier to tighten than to ease. So I think that means we should be patient. I don’t know if that means that we should let the economy run too hot, but I think in terms of the balance of risks, we can afford to be patient. But even within that, I think it would be wise to remove some accommodation, because of the distortions that rates this low – this high a level of accommodation – can have on savers, asset allocation, business decisions, and some of those imbalances and distortions can be tough to unwind and are a lot easier to recognize in hindsight.

    [ November 4, 2016 ]

    BLOOMBERG: What do you think of the idea of a high-pressure economy that Janet Yellen raised as a theoretical idea – letting inflation overshoot for a little while? Are you willing to do that?

    KAPLAN: I’d put it a little differently. I think we can afford to be patient – I don’t see the economy running away from us because of [broader] secular forces. I think we have to understand that near the zero lower bound that it’s a lot easier to tighten than to ease. So I think that means we should be patient. I don’t know if that means that we should let the economy run too hot, but I think in terms of the balance of risks, we can afford to be patient. But even within that, I think it would be wise to remove some accommodation, because of the distortions that rates this low – this high a level of accommodation – can have on savers, asset allocation, business decisions, and some of those imbalances and distortions can be tough to unwind and are a lot easier to recognize in hindsight.

  • Dennis Lockhart I do not see rates marching higher for an extended period in a preprogrammed tightening campaign. The economy does not call for that, at least not at this time.

    [ November 4, 2016 ]

    I anticipate a very gradually rising interest rate environment over the next two years. At the same time, I do not see rates marching higher for an extended period in a preprogrammed tightening campaign. The economy does not call for that, at least not at this time. Rate decisions will continue to be data-dependent and, therefore, meeting-to-meeting, in my view.

  • Patrick Harker I do think the market is possibly underestimating the rate of normalization, but we’ll see, right?

    [ October 26, 2016 ]

    WSJ: What do you think the dynamic is between financial markets and the Fed right now? Is it – is it a healthy dynamic? Or is there – is there a problem?

    HARKER: I don’t think there’s a problem. I do think the market is possibly underestimating the rate of normalization, but we’ll see, right?

    And part of the challenge is, when it comes to communication, the dot plots are all forecasts, but people take the path of the Fed funds rate as a policy statement, not as a forecast. And we have not made that clear, right? We’re asked to forecast what we think the Fed funds rate will be. That’s a different question than saying, you know, what will the Fed funds rate be? And so that one dot plot I think causes us some problems when it comes to communication.

  • John Williams If things continue to do as I expect with core inflation moving up further next year and overall inflation moving up further next year, getting closer and closer, inching, you know, into the 2 percent, up to the 2 percent range, and my view that unemployment will be around moving down to, you know, below 4¾ percent or something like that, I think we do need to keep moving on raising interest rates and faster than one increase a year.

    [ October 25, 2016 ]

    WSJ: Are you ready to say how you feel things might play out in 2017 in terms of—I’m not trying to necessarily lock you down to say, like, how many, but, you know, just your sense of how do you think monetary policy might play out or how you’d like it to play out in 2017?

    WILLIAMS: Well, I think that, you know, if things continue to do as I expect with core inflation moving up further next year and overall inflation moving up further next year, getting closer and closer, inching, you know, into the 2 percent, up to the 2 percent range, and my view that unemployment will be around moving down to, you know, below 4¾ percent or something like that, I think we do need to keep moving on raising interest rates and faster than one increase a year.

    But again, we don’t have to raise them more than a very gradual pace.

  • Charles L. Evans I think the most important part of our communications is really around not when is the next increase, but what are the terms of the subsequent increases going to be,

    [ October 24, 2016 ]

    “I think the most important part of our communications is really around not when is the next increase, but what are the terms of the subsequent increases going to be,” Evans said Monday while answering questions from reporters after a speech in Chicago.

    Evans said if the economy continues to grow in line with his forecast, it may be appropriate to raise rates three times by the end of 2017, but revamping communications with the public would allow for a more flexible approach in case those forecasts don’t pan out, especially given the downside risks he sees clouding the outlook for inflation.
    “With that type of messaging, we might be well served by not so many increases,” Evans said. “It would depend on whether or not we are making that kind of progress.”

    --------------

    From MarketWatch coverage

    The U.S. central bank needs to “demonstrate commitment to achieving the inflation target sustainably, symmetrically, and sooner rather than later,” Evans said in a speech to the University Club in Chicago.

    This might require undershooting the unemployment rate and overshooting the 2% inflation target, Evans said.

  • John Williams Williams said that he will be “definitely not losing sleep” if the Fed overshoots its inflation target, and that it’s “absolutely essential that we demonstrate that we can hit this 2 percent inflation goal.”

    [ October 21, 2016 ]

    Williams said that he will be “definitely not losing sleep” if the Fed overshoots its inflation target, and that it’s “absolutely essential that we demonstrate that we can hit this 2 percent inflation goal.”

  • Stanley Fischer We are very close to our targets" of full employment and 2-percent inflation, said Stanley Fischer. "So we're not in deep trouble with monetary policy at the moment," he responded when asked about the concept of raising the Fed's inflation target..."To change that target if you are so close, that's a problem." 

    [ October 17, 2016 ]

    We are very close to our targets of full employment and 2-percent inflation.  To change that target if you are so close -- that's a problem. 

  • Eric Rosengren No one’s talking about raising interest rates quickly. We’re talking about a gradual rate either way. My own concern is that we be sure that it is a gradual rate. And the longer we wait to continue on the process the more concerned I become that eventually it won’t be gradual, that we would have to raise rates more quickly. And given some of the uncertainties that this entire conference is highlighting, having to start raising rates much more quickly raises the risk that we would end up raising it quickly enough that we would shorten rather than lengthen the recovery.

    [ October 17, 2016 ]

    WSJ: There was a steady decline in the unemployment rate through most of this expansion, and now it’s changed. So how do you explain the change? And what signal do you take from it about the outlook for slack and for monetary policy?

    ROSENGREN: It’s definitely a positive sign for the economy. To the extent that we can continue to bring people in who are outside the labor force, that is a positive. There’s a risk to assuming that you’re going to continue to do that without starting to create more imbalances in the economy.

    So a lot of this discussion is about risks. So one side of a risk is we may have more slack than our economic models are estimating, and maybe full employment is lower than we actually expect. And so, if we tighten too quickly, you would not be able to bring those people back into the labor force. That would be a real loss for the economy. On the other side, if we’re overly confident that GDP growing faster than potential is going to bring a lot of people in, then the result would be that you would end up with labor markets being much tighter than you’re expecting, and either asset prices or inflation would start to react to the fact that the economy is overly tight.

    No one’s talking about raising interest rates quickly. We’re talking about a gradual rate either way. My own concern is that we be sure that it is a gradual rate. And the longer we wait to continue on the process the more concerned I become that eventually it won’t be gradual, that we would have to raise rates more quickly. And given some of the uncertainties that this entire conference is highlighting, having to start raising rates much more quickly raises the risk that we would end up raising it quickly enough that we would shorten rather than lengthen the recovery.