Over the last several weeks, investors faced the realizations that the Fed might take one more step on the road to normalization and that Mario Draghi’s ‘Do what it takes’ might have morphed into ‘if pushed, we could do a bit more.’ This predictably brought a jump in bond yields around the world and talk […]
As I said to some of you just before the speech, if the same framework were in place, we should hear more of the sort of talk we’ve heard for three years in communication on behalf of the consensus: job market gains continuing; repeated transitory shocks still holidng down inflation; gradual rate increases continuing. That’s pretty much what happened.
Dante’s seventh ring of hell, as I recall, is being forced to serve on a large committee. But imagine that you come across a large committee that somehow functioned effectively. Implausible certainly,
Amid all the political craziness at home and around the world, you may not have noticed that one bit of traditional policy wisdom is making a comeback. The biggest development for 2017 could be that ‘austerity as stimulus’ is out and ‘stimulus as stimulus’ is back in a big way. Following the election in Japan, […]
The theme of our recent series of posts on understanding FOMC actions and communications has been the well-disguised, steady predictability of FOMC policy. The basic story is that policy is driven by a consensus on the FOMC. The consensus tends to evolve slowly and predictably, and for some time now, the consensus has behaved consistently […]
This post provides links to a series of related posts arranged earliest to most recent. Beyond the dots What will the Fed do? (June 2016 edition) What will the Fed do? (June 2016 update!) Why has transparency been so damn confusing? 19 voices, 12 votes, 1 policy What will the Fed do? (Jackson Hole update)
My previous post described the well-disguised, steady predictability of recent FOMC policy. All that’s out the window now. (No.) Brexit changes everything! (We’ll see.) Will the Fed’s intermeeting rate cut go negative? (Get ahold of yourself.) But Brexit is putting a wrinkle in this blog: I had promised that the next post would be entitled […]
Over the last several weeks, we’ve seen what Michael Mackenzie in the FT called a renewal of the market’s tortured dance with the Fed. The basic story seems to be that the Fed “moved policy to the sidelines” at its March meeting, causing market participants to discount any risk of a near-term rate increase. The […]
Friday’s reported increase of 160,000 in nonfarm payrolls was less than the recent average. This doesn’t mean much for the macroeconomic outlook and, therefore, shouldn’t and probably won’t mean much for the path of monetary policy. Monthly nonfarm payroll gains bounce around a good deal and are substantially revised. Moreover, weather-especially winter weather–can dramatically affect […]
Since the last FOMC meeting, we have again heard cries of lost Fed credibility and of general confusion. In contrast, my colleagues and I at the CFE have been arguing for many months now that we would likely see what has in fact transpired. In our view, the Fed’s actions, including those at the March […]
The Fed has taken the position that the distressing signals from around the world do not clearly warrant a large and definitive downward shift in the outlook for the U.S. While some folks might argue that point, let’s accept it. There is, nonetheless, a heightened probability of some sort of downturn, and policymakers and others […]
Given Saudi Arabia’s long-standing commitment to act as swing producer to stabilize prices, current Saudi behavior raises big questions. Why is Saudi Arabia pumping at historic rates in the face of a collapse in the oil price? And, as President Obama’s state of the union message highlights, what should be the U.S. policy response?