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Recent FedSpeak Highlights

  • Frederic Mishkin The disruption in financial markets poses a substantial downside risk to the outlook for economic growth, and adverse economic or financial news has the potential to cause further strains.

    [ February 15, 2008 ]

    I believe that the Federal Reserve has been acting and will continue to act decisively, in the sense that our lowering of the federal funds rate target has reflected the evolution of the balance of risks to the macroeconomy. The disruption in financial markets poses a substantial downside risk to the outlook for economic growth, and adverse economic or financial news has the potential to cause further strains. In that light, the Federal Reserve's policy strategy is aimed at providing adequate insurance to help mitigate the risk of more-severe macroeconomic outcomes.

  • Charles L. Evans Our outlook at the Chicago Fed is for real GDP to increase in the first half of the year, but at a very sluggish rate. However, we expect growth will pick up to near potential by late in the year and continue at or a bit above this pace in 2009.

    [ February 14, 2008 ]

    [O]ur outlook at the Chicago Fed is for real GDP to increase in the first half of the year, but at a very sluggish rate. However, we expect growth will pick up to near potential by late in the year and continue at or a bit above this pace in 2009.

  • Ben Bernanke Although the baseline outlook envisions an improving picture, it is important to recognize that downside risks to growth remain, including the possibilities that the housing market or the labor market may deteriorate to an extent beyond that currently anticipated, or that credit conditions may tighten substantially further.

    [ February 14, 2008 ]

    Although the baseline outlook envisions an improving picture, it is important to recognize that downside risks to growth remain, including the possibilities that the housing market or the labor market may deteriorate to an extent beyond that currently anticipated, or that credit conditions may tighten substantially further. The FOMC will be carefully evaluating incoming information bearing on the economic outlook and will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks.

    More From:

    See Also:

    Source:

    http://www.federalreserve.gov/newsevents/testimony/bernanke20080214a.htm

    Venue:

    Testimony to Senate Banking, Housing and Urban Affairs Committee
  • Henry Paulson The worst is just beginning for sub-prime loan re-sets.

    [ February 12, 2008 ]

    "The worst is just beginning" for sub-prime loan re-sets.

    At Treasury-HUD press conference, as reported by Bloomberg News

     

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    Venue:

    Treasury Department News Conference
  • William Poole The best bet is that we will not have a recession.  My take on the current policy situation is that policy is at a good place for both the long-run and for cushioning the impact of financial disturbances.

    [ February 11, 2008 ]

    The best bet is that we will not have a recession.  My take on the current policy situation is that policy is at a good place for both the long-run and for cushioning the impact of financial disturbances.
     ...
    There is no question that the odds of a recession are higher than they used to be.

    From Q&A, as reported by Bloomberg News and Market News International

    More From:

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    Source:

    http://www.stls.frb.org/news/speeches/2008/02_11_08.html

    Venue:

    National Association for Business Economics, St. Louis Branch
  • Henry Paulson I always thought that decoupling was a myth.

    [ February 9, 2008 ]

    I always thought that decoupling was a myth.

    As reported by Bloomberg News

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    Venue:

    G7 Meeting
  • Janet L. Yellen While growth seems likely to be sluggish this year, the Fed’s policy actions should help to promote a pickup in growth over time. I consider it most probable that the U.S. economy will experience slow growth, and not outright recession, in coming quarters.

    [ February 7, 2008 ]

    I believe that accommodation is appropriate because the financial shock and the housing cycle have significantly restrained economic growth. While growth seems likely to be sluggish this year, the Fed’s policy actions should help to promote a pickup in growth over time. I consider it most probable that the U.S. economy will experience slow growth, and not outright recession, in coming quarters. At the same time, core consumer inflation seems likely to decline gradually to somewhat below 2 percent over the next couple of years, a level that is consistent with price stability.

    However, economic prospects are unusually uncertain. And downside risks to economic growth remain. This implies that, going forward, the Committee must carefully monitor and assess the effects of ongoing financial and economic developments on the outlook and be prepared to act in a timely manner to address developments that alter the forecast or the risks to it.

  • Richard Fisher My dissenting vote last week was simply a difference of opinion about how far and how fast we might re-spike the monetary punchbowl.

    [ February 7, 2008 ]

    My dissenting vote last week was simply a difference of opinion about how far and how fast we might re-spike the monetary punchbowl. Given that I had yet to see a mitigation in inflation and inflationary expectations from their current high levels, and that I believed the steps we had already taken would be helpful in mitigating the downside risk to growth once they took full effect, I simply did not feel it was the proper time to support additional monetary accommodation.

    I respect the majority view of the committee. I sleep well at night knowing that the collective wisdom of the group is guided by one common goal: the continued prosperity of the American people.

  • Dennis Lockhart In the face of economic weakening, the FOMC acted to avoid a restrictive posture and get rates to a level I believe will support movement toward trend growth by the second half of 2008.

    [ February 7, 2008 ]

    In response to recent economic circumstances, the Federal Open Market Committee (FOMC) acted decisively. Over a period of nine days, from January 22 to January 30, the FOMC lowered the fed funds rate 125 basis points, from 4.25 to 3 percent. Since last August, the committee has dropped the fed funds rate 225 basis points.

    These actions were taken to avert a deep and protracted economic downturn. In the face of economic weakening, the FOMC acted to avoid a restrictive posture and get rates to a level I believe will support movement toward trend growth by the second half of 2008.

  • Charles Plosser I expect growth in the first half of the year to be quite weak, around 1 percent. As conditions in the housing and financial markets begin to stabilize, I expect growth to improve in the second half of the year and to move back to trend, which I estimate is around 2.7 percent, in 2009. Overall, I am now anticipating economic growth in 2008 of near 2 percent. Given the slowdown in economic growth this year, payroll employment will rise more slowly than last year and will remain below trend for much of the year before picking up in 2009.

    [ February 6, 2008 ]

    The ongoing housing correction and the volatility and uncertainty in the credit markets are significant near-term drags on the economy and I expect growth in the first half of the year to be quite weak, around 1 percent. As conditions in the housing and financial markets begin to stabilize, I expect growth to improve in the second half of the year and to move back to trend, which I estimate is around 2.7 percent, in 2009. Overall, I am now anticipating economic growth in 2008 of near 2 percent.  

    Given the slowdown in economic growth this year, payroll employment will rise more slowly than last year and will remain below trend for much of the year before picking up in 2009. Slower job growth will also lead to an unemployment rate near 5-1/4 percent in 2008, after fluctuating between 4‑1/2 and 5 percent in 2007.  

  • Jeffrey Lacker In my view, the prominence of downside risks means that further easing ultimately may be warranted. ... if incoming data is not weaker than expected over the next several months, it's not clear further rate cuts would be warranted.

    [ February 5, 2008 ]

    In my view, the prominence of downside risks means that further easing ultimately may be warranted. My expectation that growth is likely to be sluggish this year figured prominently in my thinking about policy last month, however, so if incoming data is not weaker than expected over the next several months, it's not clear further rate cuts would be warranted.

  • Jeffrey Lacker The incoming data over the last several weeks has certainly made me willing to contemplate rate cuts.

    [ January 18, 2008 ]

    I always stand ready to cut rates when it is appropriate.  The incoming data over the last several weeks has certainly made me willing to contemplate rate cuts. It has certainly altered the outlook.

    From press Q&A, as reported by Bloomberg News and Market News International

  • Dennis Lockhart Recently, negative information has been exceeding expectations. I think these circumstances call for policymakers to be prepared to respond pragmatically. In my view, pragmatism in the face of growing weakness in the general economy may very well require additional moves to lower the federal funds rate.

    [ January 17, 2008 ]

    Recently, negative information has been exceeding expectations. I think these circumstances call for policymakers to be prepared to respond pragmatically. In my view, pragmatism in the face of growing weakness in the general economy may very well require additional moves to lower the federal funds rate.

  • Richard Fisher The challenge to monetary policy, as I see it, is to achieve the growth part of our mandate in the short term and get “ahead of the curve” without shaking faith in the currency over the long term.

    [ January 17, 2008 ]

    In my view, the degree of substantive action to support economic growth and insure against downside risk will be conditioned by what we see coming down the inflation pike. To deliver on its dual mandate, the Fed must keep one ear cocked toward signs that inflationary expectations are drifting upward as we execute additional monetary measures. 

    ...

    The challenge to monetary policy, as I see it, is to achieve the growth part of our mandate in the short term and get “ahead of the curve” without shaking faith in the currency over the long term.

  • Ben Bernanke To be useful, a fiscal stimulus package should be implemented quickly and structured so that its effects on aggregate spending are felt as much as possible within the next twelve months or so.

    [ January 17, 2008 ]

    To be useful, a fiscal stimulus package should be implemented quickly and structured so that its effects on aggregate spending are felt as much as possible within the next twelve months or so.  Stimulus that comes too late will not help support economic activity in the near term, and it could be actively destabilizing if it comes at a time when growth is already improving.  Thus, fiscal measures that involve long lead times or result in additional economic activity only over a protracted period, whatever their intrinsic merits might be, will not provide stimulus when it is most needed...  A fiscal program that increased the structural budget deficit would only make confronting those challenges more difficult.

    More From:

    See Also:

    Source:

    http://www.federalreserve.gov/newsevents/testimony/bernanke20080117a.htm

    Venue:

    Testimony to House Budget Committee
  • Sandra Pianalto Although I expect that the restraining influences to growth will diminish over time, and that the economy will gain firmer traction later this year and into 2009, I am concerned about the downside risks to that outlook.

    [ January 17, 2008 ]

    A weak December employment report, combined with a falloff in retail spending and flat industrial production, supports my view that the economy has shifted to a lower growth track. Although I expect that the restraining influences to growth will diminish over time, and that the economy will gain firmer traction later this year and into 2009, I am concerned about the downside risks to that outlook.

  • Charles Plosser  I am more uncertain about the future path of the economy than I once was. But my forecast at this point does not include a recession.

    [ January 11, 2008 ]

     I am more uncertain about the future path of the economy than I once was. But my forecast at this point does not include a recession.

  • Eric Rosengren I think we need to use a multipronged approach to help reduce the downside risk to the real economy.

    [ January 11, 2008 ]

    I think we need to use a multipronged approach to help reduce the downside risk to the real economy.

    From remarks as delivered, as reported by Market News International

  • Frederic Mishkin The Federal Reserve has been acting and will continue to act decisively, in the sense that our policy strategy reflects the evolution of the balance of risks and not simply a change in the modal outlook for the macroeconomy.

    [ January 11, 2008 ]

    [T]he Federal Reserve has been acting and will continue to act decisively, in the sense that our policy strategy reflects the evolution of the balance of risks and not simply a change in the modal outlook for the macroeconomy. The disruption in financial markets poses a substantial downside risk to the outlook for economic growth, and adverse economic or financial news has the potential to cause further strains. In that light, the Federal Reserve’s policy strategy is aimed at providing insurance to help avoid more severe macroeconomic outcomes.

    More From:

    Source:

    http://www.federalreserve.gov/newsevents/speech/mishkin20080111a.htm

    Venue:

    Federal Reserve Bank of New York
  • Thomas HoenigPulling this altogether, I expect GDP growth for the year to be in the range of 2 percent to 2.5 percent measured on a Q4-over-Q4 basis.  I also expect the rise in overall inflation to moderate as the U.S. economy slows, but I do not expect any quick reversal of inflation trends, and therefore I expect core inflation to remain above 2 percent. 

    [ January 10, 2008 ]