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Recent FedSpeak Highlights

  • Janet L. YellenWe've got a 4.6% unemployment rate.  That's great, if it stays in that region.

    [ February 6, 2007 ]

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    Source:

    http://www.frbsf.org/news/speeches/2007/0206.html

    Venue:

    Asia Society of Southern California
  • Thomas HoenigIn my opinion, there has been a discrepancy lately between the views of the FOMC members, as summarized in the Committee’s public statements, and the views of many financing market participants.  Although there is a wide range of views in the market, some participants have jumped to the conclusion that monetary policy will be eased in the near future.  Surveys of financial market economists show that many expect an easing in monetary policy sometime this year.  In addition, the yield curve and financing futures prices incorporate some expected easing of monetary policy later this year.

    In contrast, the FOMC has continued to express its concern about upside inflation risks. After its last meeting on December 12, the FOMC stated that “some inflation risk remain” and that “the extent and timing of any additional firming” would depend on how incoming data affected the outlook for growth and inflation.  

    In my view, the easing of monetary policy that market participants expect would be appropriate only if inflation clearly subsided from recent elevated levels, and if the incoming data implied the inflation outlook would remain favorable in the future.  In my judgment, it is premature to conclude that current conditions define a clear path for policy.

    [ January 19, 2007 ]
  • Jeffrey Lacker The risk that core inflation surges again, or does not subside as desired, clearly remains the predominant macroeconomic policy risk.

    [ January 19, 2007 ]

    The November inflation reports, however, have provided some tentative evidence suggesting a moderating trend. For example, the three-month average rate of change in the core PCE price index fell to 1.8 percent in November. That inflation measure has exhibited substantial oscillations, however – it fell to 1.8 percent in February of last year before rising to 2.9 percent within three months when energy prices surged. In view of the recent record, it will take several months worth of data to provide statistically convincing evidence of a moderation in inflation. In the meantime, the risk that core inflation surges again, or does not subside as desired, clearly remains the predominant macroeconomic policy risk.

  • Sandra Pianalto... I see the economy growing at a more moderate pace over the next few years than we saw in the past couple of years. But there are risks to this outlook. The first risk is that the weakness in the housing sector spills over to other sectors of the economy, depressing overall growth. The second risk is that inflation remains stubbornly high...

    The most recent price statistics have been encouraging, but not convincing...

    ...[T]here is still a risk that the underlying inflation trend will not continue to improve; in which case, the FOMC will need to respond with the appropriate policy actions.

    [ January 18, 2007 ]
  • Janet L. Yellen I find recent inflation readings encouraging, but I also am keenly aware that this pattern has yet to show up in the data on any sort of a sustained basis.

    [ January 17, 2007 ]

    I find recent inflation readings encouraging, but I also am keenly aware that this pattern has yet to show up in the data on any sort of a sustained basis. The inflation situation remains uncertain and, in particular, there are upside risks to my outlook, especially having to do with the situation in labor markets.

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    Source:

    http://www.frbsf.org/news/speeches/2007/0117.html

    Venue:

    Arizona Council on Economic Education
  • Frederic Mishkin I am in the camp of those who argue that monetary policy makers should restrict their efforts to achieving their dual mandate of stabilizing inflation and employment and should not alter policy to have preemptive effects on asset prices.

    [ January 17, 2007 ]

    A special role for asset prices in the conduct of monetary policy requires three key assumptions. First, one must assume that a central bank can identify a bubble in progress... A second assumption needed to justify a special role for asset prices is that monetary policy cannot appropriately deal with the consequences of a burst bubble, and so preemptive actions against a bubble are needed... A third assumption needed to justify a special focus on asset prices in the conduct of monetary policy is that a central bank actually knows the appropriate monetary policy to deflate a bubble Because I doubt that any of the three assumptions needed to justify a special monetary policy focus on asset prices holds up, I am in the camp of those who argue that monetary policy makers should restrict their efforts to achieving their dual mandate of stabilizing inflation and employment and should not alter policy to have preemptive effects on asset prices.

  • Cathy Minehan Inflation has been and remains a challenge, though recent data provide a bit of assurance that price pressures may be beginning to ebb.

    [ January 12, 2007 ]

    Inflation has been and remains a challenge, though recent data provide a bit of assurance that price pressures may be beginning to ebb.

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    Source:

    http://www.bos.frb.org/news/speeches/cem/2007/011207.htm

    Venue:

    Vermont Economic Outlook Conference
  • Richard Fisher I am very comfortable with where we are now in terms of our policy. 

    [ January 10, 2007 ]

    We have a pretty good cruising speed currently... We have seen some very encouraging news {about inflation}...  I am very comfortable with where we are now in terms of our policy. 

    From a Bloomberg TV interview.

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    Bloomberg TV
  • Donald Kohn I believe it is still too early to relax our concerns about whether the run-up in price pressures in the spring and summer of last year is truly unwinding and whether it is unwinding rapidly enough.

    [ January 8, 2007 ]

    In my view, however, what we are seeing in the recent information on factory output and capital spending is not the leading edge of general economic weakness but instead an adjustment to a sustained pace of expansion that, necessarily, is less rapid than that from mid-2003 to mid-2006...

    ...

    So, despite the recent favorable price data, I believe it is still too early to relax our concerns about whether the run-up in price pressures in the spring and summer of last year is truly unwinding and whether it is unwinding rapidly enough to forestall a pickup in inflation expectations.

  • Cathy Minehan Thus, as the year ended, the economy seemed to have completed that difficult down-shift in tempo, often referred to as a soft landing...   But for the 12-month period as a whole, core remained close to its third-quarter high, suggesting inflation may be slow to taper off.

    [ January 5, 2007 ]

    Thus, as the year ended, the economy seemed to have completed that difficult down-shift in tempo, often referred to as a soft landing. On the inflation front, pressures seemed to ease a bit as November headline CPI grew at an annual pace just under 2 percent and core CPI was flat for the month. But for the 12-month period as a whole, core remained close to its third-quarter high, suggesting inflation may be slow to taper off.

    More From:

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    Source:

    http://www.bos.frb.org/news/speeches/cem/2007/010507.htm

    Venue:

    Connecticut Business and Industry Association
  • Jeffrey Lacker The risk that core inflation surges again, or does not subside as desired, clearly remains the predominant macroeconomic policy risk.

    [ December 21, 2006 ]

    The longer core inflation persists above 2 percent, the greater the danger of inflation becoming entrenched at too high a rate.

    Many forecasters have been saying core inflation will moderate in the near term, and this certainly would be desirable. But such a moderation is not yet evident, despite the two most recent CPI reports. For example, the three-month average rate of change in the core PCE price index has been oscillating between 1.8 percent and 2.9 percent since last year's hurricanes, and stands at 2.7 percent as of October. In view of this recent record, it would take several months worth of data to provide statistically convincing evidence of a moderation in inflation. In the meantime, the risk that core inflation surges again, or does not subside as desired, clearly remains the predominant macroeconomic policy risk.

  • Richard Fisher I would have to say that the risk of unacceptably high inflation still outweighs the risk of substandard economic growth.

    [ December 19, 2006 ]

    On the inflation front, the good news is inflationary pressures appear to have reached a stasis, despite the labor shortages in certain sectors -- particularly in chemicals and petroleum industries and in functions requiring skilled and semiskilled workers. The bad news is that the stasis is at too high a level for party poopers like me who will have no choice but to advocate tightening monetary policy further if inflation does not ratchet downward.

    Given all of this, I would have to say that the risk of unacceptably high inflation still outweighs the risk of substandard economic growth

  • Michael Moskow When you look at the broad trend in the economy, there's a lot of strength there.

    [ December 4, 2006 ]

    "We would expect some monthly ups and downs, but when you look at the broad trend in the economy, there's a lot of strength there."

    "Overall, I still think the economy is solid." 

    Moskow said that the Chicago Fed is expecting gross domestic product growth to be "somewhat below trend," citing a forecast for 2007 of a 2.8% expansion.  "I don't think that the data we have seen are out of line with that forecast," he added.

    From a CNBC interview.

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    CNBC interview

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    CNBC Interview
  • Donald Kohn But the risk {to our inflation forecast} is still tilted to the upside.

    [ December 1, 2006 ]

    {At the} last meeting of the FOMC, with the minutes released and the announcement and the speech that Chairman Bernanke gave just earlier this week, we suggested that that trend seems to be shifting, and our expectation is that it will shift towards a gradual decrease. But the risk around that expectation is still tilted to the upside.

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

    More From:

    Source:

    http://www.federalreserve.gov/boarddocs/speeches/2006/200612012/default.htm

    Venue:

    International Research Forum on Monetary Policy
  • Michael MoskowSo, taking all these 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 remaining too low. And as reflected in the minutes of the October meeting, the Federal Open Market Committee agreed that inflation risks remained the dominant concern.

    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 for the economy.

    [ December 1, 2006 ]

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    Source:

    Bloomberg transcript 12/1/2006 18:49

    Venue:

    Carthage Business and Professional Coalition
  • Charles Plosser It's very dangerous to focus in on one number.

    [ December 1, 2006 ]

    "It's very dangerous to focus in on one number,'' Plosser told reporters during a conference hosted by the Philadelphia Fed on economic growth and development today. ``You have to focus on context and not allow yourself to get hung up on one particular number.''

     As reported by Bloomberg News

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    Venue:

    Federal Reserve Bank of Philadelphia
  • Ben Bernanke The level of the core inflation rate remains uncomfortably high.

    [ November 28, 2006 ]

    [T]he level of the core inflation rate remains uncomfortably high.

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    Source:

    http://www.federalreserve.gov/boarddocs/speeches/2006/20061128/default.htm

    Venue:

    National Italian American Foundation
  • Ben Bernanke Slower growth of potential output does not necessarily mean that inflation will be higher or that monetary policy will have to be tighter. 

    [ November 28, 2006 ]

    In the medium term, because the factors that affect potential output and thus aggregate supply also tend to affect aggregate demand, slower growth of potential output does not necessarily mean that inflation will be higher or that monetary policy will have to be tighter.  Rather, the implications for monetary policy of a possible slowing in the growth of potential output depend on the extent to which such a slowing alters the balance of supply and demand in the economy. For example, as we saw in the second half of the 1990s, changes in expected productivity growth and potential output can significantly affect aggregate demand through their influences on income expectations and asset prices. The problem for policymakers is to identify, in real time, any changes in the prospective growth rate of potential output and to anticipate the accompanying effects on the balance of supply and demand.

  • Charles Plosser The current stance of policy, or even firming further, may be in the best interests of the economy’s long-run performance.

    [ November 28, 2006 ]

    While I am fairly optimistic that the fundamentals remain sound for continued economic expansion, I am not as sanguine about the prospects for inflation.

    ...So we need to remain vigilant and recognize that maintaining the current stance of policy, or even firming further, may be in the best interests of the economy’s long-run performance.

  • William Poole The general tenor of the data has suggested that inflation is leveling off or declining, rather than continuing to rise.

    [ November 22, 2006 ]

    The general tenor of the data has suggested that inflation is leveling off or declining, rather than continuing to rise.

    ...The St. Louis Fed president said the cost of another round of inflation pressures "could be quite large", and in that regard he is "asymmetrical" in his assessment of the risks to the economy of a sustained period of elevated inflation. 

    "However, my judgment is that looking ahead the risks the data will come in higher than anticipated on inflation are roughly symmetrical with the risk that the inflation issue will subside," Poole said.  The current level of the federal funds rate is "just about right given the information we have".

    As reported by Bloomberg News