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Recent FedSpeak Highlights

  • Kevin Warsh There remain, I believe, clear upside risks to that inflation outlook.

    [ November 21, 2006 ]

    Inflation, though down somewhat from its level earlier this year, remains uncomfortably elevated. Financial market prices imply that inflation will continue its gradual but persistent downward track during the forecast period. There remain, I believe, clear upside risks to that inflation outlook.

  • Michael Moskow One month doesn't make a trend.

    [ November 16, 2006 ]

    "One month doesn't make a trend,'' Moskow told reporters after a speech to American Business Media in Chicago. ``{The CPI} is moving in the right direction. The key is whether that can be sustained and how quickly we can move to rates that are within the range that is commensurate with price stability. We are certainly not there now.''

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    American Business Media Conference
  • William Poole If the unemployment rate remains about steady next year we can expect average monthly growth of employment ranging from a low of about 70,000 to a high of about 120,000.

    [ November 14, 2006 ]

    A paper published earlier this year in the Brookings Papers on Economic Activity (Aaronson et al., 2006) contains a summary table reporting four different projections of labor force growth out to 2014 based on the authors’ model and estimates from the Congressional Budget Office, the Bureau of Labor Statistics and the Social Security Administration. For 2007, the projections range from a low of 0.6 percent growth to a high of 1.1 percent growth. For 2014, the projections range from a low of 0.2 percent to a high of 0.8 percent.

    The magnitude of these differences is stunning. Based on these projections, if the unemployment rate remains about steady next year we can expect average monthly growth of employment ranging from a low of about 70,000 to a high of about 120,000. These are rough, rounded off estimates—to provide the estimates any other way would imply a false sense of precision. On the same basis, in 2014, the range is from about 30,000 to about 100,000 new jobs each month. These are very large differences. Moreover, given that each of the models used to produce these estimates is subject to error, in fact the range of uncertainty is even greater than the numbers just quoted.

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    http://www.stlouisfed.org/news/speeches/2006/11_14_06.html

    Venue:

    CFA Society of Philadelphia
  • Richard Fisher We are growing forcefully.

    [ November 13, 2006 ]

    "We live in a country with enormous economic production."  Fisher said at the Texas Lyceum Public Conference in San Antonio.  ``We produce over $13 trillion a year in output.  We have 300 million mouths to feed, 140 million workers, and we are growing forcefully.''

    As reported by Bloomberg News

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    Texas Lyceum Public Conference
  • Ben Bernanke We certainly don't substitute expectations data for more fundamental analysis of inflation. 

    [ November 10, 2006 ]

    If you condition monetary policy strictly on expectations you're going to get a hall of mirrors problem, and it's not a good idea, to put it mildly...

    We do look at expectations.  We think it's informative in a number of ways.  But we certainly don't substitute expectations data for more fundamental analysis of inflation. 

    From the Q&A session.

  • Jeffrey Lacker I've been surprised over the last several months by the extent to which the markets seem to discount the possibility of us firming policy further to bring inflation down.

    [ November 6, 2006 ]

    [Lacker] said the reason inflation “seems to be so persistent ... is that we have not communicated very strongly that we want inflation to be lower and would be willing to take action to bring that about”.

    He added the Fed sometimes talked about pass-through “as if it is a force of nature rather than a product of policy expectations”.

    His remarks are likely to be seen by some Fed watchers as critical of Ben Bernanke, the Fed chairman, even though Mr Lacker was careful not to mention him by name.

    Mr Lacker said he had been “surprised over the last several months by the extent to which the markets seem to discount the possibility of us firming policy further to bring inflation down”.

  • Sandra Pianalto But some risk remains that inflation will not recede into a range consistent with the FOMC's price stability objective.  In that event, it is possible that some additional monetary policy restraint would be required.

    [ November 6, 2006 ]

    The inflation outlook is a slightly different story.  I do not believe that inflation will accelerate further.  In fact, I expect some slowing in the rate of inflation as recent energy price changes and the effects of monetary policy actions work through the economy.  But some risk remains that inflation will not recede into a range consistent with the FOMC's price stability objective.  In that event, it is possible that some additional monetary policy restraint would be required.

  • Michael MoskowTaking all of the factors on growth and inflation into account, my current assessment is that the risk of inflation remaining too high is greater than the risk of growth being too low. Thus, some additional firming of policy may yet be necessary to bring inflation back to a range consistent with price stability in a reasonable period of time. But that decision will depend on how the incoming data affect the outlook.

    [ November 6, 2006 ]

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    Source:

    http://www.chicagofed.org/news_and_conferences/speeches/2006_11_06_outlook.cfm

    Venue:

    Chicagoland Chamber of Conference
  • Susan Bies Thus, in my judgment, inflation appears poised to decelerate in coming months as energy prices stabilize and resource pressures ease. But the risks to that outlook seem tilted toward the upside.

    [ November 2, 2006 ]

    Thus, in my judgment, inflation appears poised to decelerate in coming months as energy prices stabilize and resource pressures ease. But the risks to that outlook seem tilted toward the upside.

  • Richard Fisher I'm encouraged on the inflation front. 

    [ October 30, 2006 ]

    I'm encouraged on the inflation front.  You see it in the CPI, you see it in the PCE (personal consumption expenditures price index), ex-food, ex-energy.  You see it now in the trimmed mean (PCE).

    From an interview with Reuters News

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    Reuters Interview
  • Jeffrey Lacker I don't want to speak for any of my colleagues, but I'm unhappy with inflation where it is now.

    [ October 30, 2006 ]

    "I don't want to speak for any of my colleagues, but I'm unhappy with inflation where it is now," he said.

    The recent core PCE trend "doesn't give me any confidence in how fast it's going to come down," Lacker said.

    As reported by Dow Jones Newswires

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    Venue:

    Greater Baltimore Commitee
  • Janet L. Yellen Frankly, the economy seems pretty strong outside of housing.  The job market remains healthy.  The risks with respect to growth are two-sided.

    [ October 16, 2006 ]

    We would like to see the economy slow some to relieve wage pressures... Frankly, the economy seems pretty strong outside of housing.  The job market remains healthy.  The risks with respect to growth are two-sided."

    From Q&A session as reported by Reuters

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    Source:

    http://www.frbsf.org/news/speeches/2006/1016.html

    Venue:

    Hong Kong Association of Northern California
  • Michael Moskow My current assessment is that the risk of inflation remaining too high is greater than the risk of growth being too low.

    [ October 12, 2006 ]

    Taking all of the factors into account, my current assessment is that the risk of inflation remaining too high is greater than the risk of growth being too low. Thus, some additional firming of policy may yet be necessary to bring inflation back to a range consistent with price stability in a reasonable period of time. But that decision will depend on how the incoming data affect the outlook.

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    http://www.chicagofed.org/news_and_conferences/speeches/2006_10_12_real_estate.cfm

    Venue:

    Marshall Bennett Institute of Real Estate at Roosevelt University
  • Jeffrey Lacker Should inflation persist around the current elevated level, firmer monetary policy would be required to restore price stability.

    [ October 11, 2006 ]

    Should inflation persist around the current elevated level, firmer monetary policy would be required to restore price stability. As a result, I believe policymakers will need to remain quite vigilant in the period ahead, to ensure that inflation moderates at a sufficient pace.

  • Janet L. Yellen In summary, monetary policymakers again are doing a balancing act, seeking the best way to temper inflationary pressures while not exposing the business cycle expansion to undue risk.

    [ October 9, 2006 ]

    In summary, monetary policymakers again are doing a balancing act, seeking the best way to temper inflationary pressures while not exposing the business cycle expansion to undue risk. Holding the stance of policy steady for a time makes sense to me. First, we appear to be within range of the moderately restrictive policy setting that seems appropriate. Second, pausing gives us time to observe the effects of previous policy actions and other factors to allow for adjustments to the policy setting that will keep us moving toward the desired outcome for inflation, output, and employment. 

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    Source:

    http://www.frbsf.org/news/speeches/2006/1009.html

    Venue:

    California Independent Bankers Annual Convention
  • Sandra Pianalto We are under no illusion that we are perfect forecasters.

    [ October 5, 2006 ]

    [T]he judgments associated with monetary policy are not always as obvious as they might appear. Economic conditions can be unpredictable, and we are under no illusion that we are perfect forecasters. To paraphrase former Federal Reserve Chairman Alan Greenspan, we are essentially risk managers. We need to make policy choices that stand the best chance of moving us toward our objectives, given our imperfect understanding of the changing environment around us.

  • Charles Plosser Moreover, trying to use monetary policy to stabilize output and employment in the short run — can actually do more harm than good.

    [ October 5, 2006 ]

    A few minutes ago I made the point that monetary policy cannot influence the economy’s growth or employment potential over the long run. The fact is that economists have had a very difficult time identifying any reliable and exploitable link between monetary policy actions and real output or employment in the short run either. Policymakers have neither the knowledge nor the tools to manage aggregate demand with the timing and precision necessary to neutralize the impact of unexpected shocks on output or employment.

    Nonetheless, it is the economy’s best interest for policy to respond to conditions in a manner that is consistent with the goal of price stability. So, for example, if stronger productivity growth enables the economy to sustain higher output growth, then the market will demand a higher level of interest rates…

    …Now, I recognize that the policy approach I am advocating here is difficult to implement. We often don’t observe economic shocks in a timely way, nor are we able to precisely measure the level of interest rates the economy is seeking in response to such shocks. Consequently, monetary policy should not be overly sensitive to short-run fluctuations. Thus, keen judgment is called for, and a little luck doesn’t hurt either.

    But I believe the principle behind the approach is sound. Indeed, it is simply an elaboration of my first principle: the central bank should always set interest rates consistent with the goal of maintaining long-run price stability so as to foster maximum economic growth and employment. Moreover, trying to use monetary policy to stabilize output and employment in the short run — can actually do more harm than good.  A look back at the 1970s underscores the point quite dramatically. When the economy was hit with a series of oil price shocks, the Fed responded with stimulative policies intended to maintain output and employment growth. These policies largely failed, generating excessive inflation even as the unemployment rate rose and the economy weakened. The Fed was relying on a short-run relationship between economic activity and inflation that is simply not reliable.

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    Source:

    http://www.philadelphiafed.org/publicaffairs/speeches/2006_plosser1.html

    Venue:

    CFA Society of Philadelphia
  • Donald Kohn I think that the risks to my outlook for economic activity may be skewed a bit to the downside, while those to my forecast of gradually declining inflation are tilted to the upside. In my view, in the current circumstances, the upside risks to inflation are of greater concern.

    [ October 4, 2006 ]

    I think that the risks to my outlook for economic activity may be skewed a bit to the downside, while those to my forecast of gradually declining inflation are tilted to the upside. In my view, in the current circumstances, the upside risks to inflation are of greater concern.

  • Ben Bernanke We do believe that inflation is going to be coming down gradually over time, but it is something that we have to watch very carefully to make sure that it doesn't rise or even remain where it is.

    [ October 4, 2006 ]

    We do believe that inflation is going to be coming down gradually over time, but it is something that we have to watch very carefully to make sure that it doesn't rise or even remain where it is.

    From the Q&A session, as reported by Bloomberg News

  • William PooleWhether the August decision to hold the target funds rate unchanged will turn out to be a pause in the process of raising rates, a longer-lasting stop or even the peak, will depend on the economy’s evolution in coming months.

    [ September 29, 2006 ]

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    Venue:

    Middle Tennessee State University Annual Economic Outlook Conference