This is the summary of the most important points the Federal Reserve officials made in their public speeches in since last week, November 27.
Federal Reserve Bank of New York President John Williams said on December 4:
- The US economy overall “in really good shape”
- We will evaluate incoming data as FED decides on a policy path
- Continues to expect further gradual increases in rates
- Expects price inflation to move a bit above 2%, no sign it will rise too high
- Williams expects the economy to continue to grow at a strong rate of 2.5% next year, making for longest US expansion ever
- Williams said that Fed has reached objectives as well as it ever has
Federal Reserve’s Vice-Chairman for supervision Randal Quarles said on December 2 that Fed wants to recalibrate rules, not relax them:
- There’s a range of views on the FOMC where the neutral level is, from 2.5% to 3.5%, and “we’re coming up to the bottom of that range”
- neutral rate “not a terribly precise” concept, most useful when clear in which direction monetary policy should move
Federal Reserve Vice-Chairman Richard Clarida expressed doubts about the dot-plot projections saying on December 2:
- That trade is an important part of the global economy
- The Fed’s dot’s projections of interest rates “are not going anywhere”
- Fed could operate somewhat above 2% inflation
- The current framework is serving the FED well with the review next year will seek ways to refine the framework
Minneapolis Federal Reserve president Neel Kashkari said for CNBC on Friday, November 30 that:
- There is a lot of uncertainty of around where the neutral is, as we are close to neutral rates right now
- Inflation expectations in the US are well anchored
- Dramatic rate hikes could cause recessions
- We should pause on rates now
Federal Reserve Chairman Jerome Powell said at the economic club of New York on Wednesday, November 28 that:
- Powell: “close” to price stability, maximum employment mandates
- Gradual US rate hikes balance risks to forecast
- FED is balancing risks of shortening expansion, on one hand, higher inflation and instability on other
- Powell repeated that he sees “moderate” overall vulnerabilities to financial stability
- Powell expects solid US growth, low unemployment, and near-target inflation
- Powell reiterated that there is no pre-set policy path as Fed is paying “very close attention” to data
- FED working with U.S. firms to prepare for a full range of Brexit outcomes
Federal Reserve Governor Richard Clarida expressed a cautious policy outlook while speaking to bankers in New York on Tuesday, November 27. The Federal Open Market Committee’s newest member emphasized the importance of policymakers’ data dependency in their approach. Key points from Clarida’s speech:
- Uncertainty around neutral policy, maximum unemployment highlights need for data-dependency
- Monetary policy should aim to sustain US growth and to achieve its dual mandate
- Risks are now more symmetric, less skewed to the downside than in past
- Clarida expects inflation to remain anchored; watching for signs of weakness
- Clarida would back more rate hikes than expected if inflation surprised to the upside
- The US economic fundamentals “robust” and GDP growth “strong”
- US labor market “robust” and wage growth picking up
St. Louis Federal Reserve President James Bullard said on Tuesday, November 27 that:
- Possible “cracks” in growth to shape FED debate in the coming year
- Bullard further said expects slower growth over the next two years, making it ‘tougher’ for FED to continue rate increases
- Bullard, the upcoming voter on policy in 2019, said rates already at or near the neutral level
- Bullard said the economy, jobs market otherwise strong, with only moderate financial risks
- Bullard said he does not expects low unemployment to spark inflation
Share
