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But equity prices were only holding their own after a substantial decline earlier and the dollar had appreciated. | dovish | 0 |
However, some participants noted that the recent rise in the prices of oil and other commodities, as well as increases in import prices stemming from the decline in the foreign exchange value of the dollar, could boost inflation pressures. | hawkish | 1 |
So the term “trend inflation”—usually there are a variety of statistical techniques that can be used to extract a trend from a series. | neutral | 2 |
In the absence of such offsetting operations, a decrease in currency demand would raise the amount of reserves and hence lower the federal funds rate. | dovish | 0 |
Accelerating productivity poses a significant complication for economic forecasting. | dovish | 0 |
At the conclusion of the discussion, the Committee voted to authorize and direct the Federal Reserve Bank of New York, until it was instructed otherwise, to execute transactions in the SOMA in accordance with the following domestic policy directive: "Consistent with its statutory mandate, the Federal Open Market Committee seeks monetary and financial conditions that will foster maximum employment and price stability. | dovish | 0 |
While recognizing the value of smoothing, I still feel that in the interest rate targeting regime the Fed now uses, we should at times be ready to change interest rates quite quickly in response to economic conditions. | neutral | 2 |
They also agreed that the inflation situation seemed to have improved slightly and judged that it was no longer appropriate to indicate that a sustained moderation in inflation pressures had yet to be shown. | neutral | 2 |
On a 12-month basis, both overall inflation and core inflation, which excludes changes in food and energy prices, had remained near 2 percent. | neutral | 2 |
In these circumstances, inflation pressures could be expected to remain subdued and some further disinflation might well occur. | dovish | 0 |
A few participants expressed less confidence in this outlook for inflation and commented that inflation had averaged less than 2 percent over the past several years even as resource utilization had increased, or pointed to downward pressures from global or technology-related factors that could continue to suppress inflation. | dovish | 0 |
Moreover, measures of labor compensation showed only moderate gains while relatively wide profit margins could allow firms to absorb somewhat larger increases in labor and other costs without boosting prices. | neutral | 2 |
What I’m telling you is that the stance of monetary policy we have today, we believe, is appropriate. | neutral | 2 |
In addition, at every policy meeting, each member of the MPC is operating with the same information from the staff, and before the quarterly meetings that precede an Inflation Report, the members have sat through a number of discussions covering all aspects of the forecast. | neutral | 2 |
The changes we made last year to our Statement on Longer-Run Goals and Monetary Policy Strategy are well suited to address today's challenges. | neutral | 2 |
From a policy perspective, a difficulty with all these measures is that they reflect expectations of headline inflation rather than the core inflation measures usually emphasized in the monetary policy context. | neutral | 2 |
One involves the so-called zero bound on nominal interest rates; the other involves labor markets. | neutral | 2 |
In the productivity boom that followed World War I, a chief technological innovation was the spread of electrification to the factory floor. | neutral | 2 |
Members agreed that the Federal Reserve was committed to using its full range of tools to support the U. S. economy in this challenging time, thereby promoting its maximum-employment and price-stability goals. | dovish | 0 |
An unexpectedly sharp increase in wages or inflation could tell you that you’re reaching those points. | hawkish | 1 |
However, in light of the projected persistence of slack in labor and product markets and the anticipated stability in long-term inflation expectations, the increase in inflation was expected to be mostly transitory if oil and other commodity prices did not rise significantly further. | neutral | 2 |
In the residential real estate sector, home sales and construction had increased from very low levels, and house prices appeared to be stabilizing. | neutral | 2 |
A key factor in this assessment continued to be their outlook for rapid further gains in structural productivity that would help to hold down increases in unit labor costs. | neutral | 2 |
In light of the robust expansion of capital spending thus far this year, the outlook for business investment spending was revised up appreciably, as more of the strength over the latter part of 2004 was attributed to underlying demand and less to the effects of the partial-expensing tax provision. | hawkish | 1 |
In the end, they concurred that the statement should note that economic growth had rebounded in the current quarter but that it appeared likely to moderate to a more sustainable pace in coming quarters. | neutral | 2 |
November 08, 2021 Flexible Average Inflation Targeting and Prospects for U.S. Monetary Policy Vice Chair Richard H. Clarida At the Symposium on Monetary Policy Frameworks, The Brookings Institution, Washington, D.C. (via webcast) Share Watch Live Outlooks and Outcomes for the U.S. Economy The U.S. economy in the second quarter of this year made the transition from economic recovery to economic expansion.1 Given the catastrophic collapse in U.S. economic activity in the first half of 2020 as a result of the global pandemic and the mitigation efforts put in place to contain it, few forecasters could have expected—or even dared to hope—in the spring of last year that the recovery in gross domestic product (GDP), from the sharpest decline in activity since the Great Depression, would be either so robust or as rapid. | dovish | 0 |
And, at a high level, yes, I would say, and I’ve said before, that it’s really fiscal policy that is more powerful and that has much more to do with—fiscal policy can do those things that will increase the longer-run growth rate of the United States by improving productivity and labor force September 18, 2019 participation and the skills and aptitudes of workers. | neutral | 2 |
And those don’t—those, frankly, don’t carry significant implications in the long run for the—for inflation or for the American economy. | neutral | 2 |
Indeed, in the IMF's latest World Economic Outlook, four out of five countries in this group are expected to post inflation rates between 1 percent and 3 percent this year. | neutral | 2 |
Household spending was projected to grow at a fairly solid rate, supported by higher employment and somewhat lower energy prices but damped somewhat by lessened stimulus from gains in wealth and the need for households to rebuild savings. | hawkish | 1 |
The invasion and related events were creating additional upward pressure on inflation and were likely to weigh on economic activity. | hawkish | 1 |
These members indicated that the economic outlook remained positive and that they anticipated, under an unchanged policy stance, continued strong labor market conditions and solid growth in activity, with inflation gradually moving up to the Committee's 2 percent objective. | neutral | 2 |
Overall consumer prices increased in July and August at about the second-quarter rate. | hawkish | 1 |
Reinforcing this outlook was recent evidence of somewhat faster than anticipated productivity growth, the prospect that world economic conditions would hold down energy prices, and a sharp drop in near-term inflation expectations of households as reported in recent surveys. | dovish | 0 |
The strong support from monetary policy, together with fiscal stimulus, should turn the K-shaped recovery into a broad-based and inclusive recovery that delivers full employment, as Mike McCracken would have wished. | dovish | 0 |
Putting It All Together I would now like to step back and consider the relative contributions to the trade deficit of each of the explanations I have discussed, as shown in figure 6.7 To the extent that the contributions of these shocks are reasonably well measured by the macroeconomic model simulations, the most important message I draw from them is that no single factor constitutes a dominant explanation of the deterioration in the U.S. current account balance. | hawkish | 1 |
A number of participants indicated that the Committee should resume asset purchases only if substantially adverse economic circumstances warranted greater monetary policy accommodation than could be provided by lowering the federal funds rate to the effective lower bound. | dovish | 0 |
I will focus my remarks today on the use of explicit forward guidance as a tool for monetary policy.1 Before I start, let me briefly discuss near-term monetary policy. | neutral | 2 |
Similarly, I don't think we yet fully understand the role of Year 2000 preparations in either the late 1990s investment boom or the acceleration in productivity. | neutral | 2 |
This modal projection for the path of the unemployment rate is, according to the Atlanta Fed jobs calculator, consistent with a rebound in labor force participation to its estimated demographic trend and is also consistent with cumulative employment gains this year and next that, by the end of 2022, eliminate the 7 million "employment gap" relative to the previous cycle peak I mentioned earlier.5 As is the case for GDP growth and the unemployment rate, my projections for headline and core PCE (personal consumption expenditures) inflation are also similar to the paths of the SEP median of modal projections for these variables. | neutral | 2 |
November 01, 2006 Community Development Financial Institutions: Promoting Economic Growth and Opportunity Chairman Ben S. Bernanke At the Opportunity Finance Network’s Annual Conference, Washington, D.C. Share Good afternoon and thank you for inviting me to speak to your annual conference. | neutral | 2 |
Because they cannot rule out the chance that some asset prices might correct more than anticipated, policymakers must consider how the economy might withstand such a correction. | neutral | 2 |
My goal is not to draw conclusions on recent movements in risk premiums but rather to give you a sense of how estimates of risk premiums may influence our policy decisionmaking, to note some of the difficulties that we face in interpreting their movements, and, I hope, to stimulate further research in this already fertile field.1 At the Federal Reserve, we pay a lot of attention to financial market prices in the formulation of monetary policy. | neutral | 2 |
"4 Importantly, the level of uncertainty around the paths for inflation and employment are higher than normal as we navigate the unprecedented reopening of the world economy. | neutral | 2 |
Instead, I would like to address a separate but not unrelated topic, the interaction of bank supervision and regulation with monetary policy, and how supervision and regulation might work to make monetary policy implementation more effective in the current environment, particularly as it relates to a bank's demand for reserves.2 But first, let me start with a brief take on the current economic outlook. | neutral | 2 |
To be clear, when I say "risk premium" I mean the additional compensation required by investors for holding a risky security--that is, one with uncertain returns--above the compensation that would be demanded by risk-neutral investors who care only about expected returns. | neutral | 2 |
Business contacts in a few Districts reported that they had begun to have some more ability to raise prices to cover higher input costs. | hawkish | 1 |
May 13, 2021 The Economic Outlook and Monetary Policy Governor Christopher J. Waller At The Global Interdependence Center's 39th Annual Monetary and Trade Conference, The LeBow College of Business, Drexel University, Philadelphia, Pennsylvania (via webcast) Share Watch Live Thank you, Kathleen, and thank you, George and the Global Interdependence Center, for the invitation to speak to you this afternoon. | neutral | 2 |
Accordingly, while the weight of current economic output is probably only modestly higher than it was a half century ago, value added, adjusted for price change, has risen well over threefold. | neutral | 2 |
The Committee also anticipates that inflation will settle, over coming quarters, at levels at or below those consistent with the Committee's dual mandate. | neutral | 2 |
But, first, on inflation expectations, it is true that the breakevens from the inflation-adjusted—inflation-indexed bonds have come down. | dovish | 0 |
The GDP (in real terms, after inflation) has been growing continuously for eight years and this long expansion, instead of petering out, has accelerated in the last couple of years. | hawkish | 1 |
Flexible inflation averaging could bring some of the benefits of a formal average inflation targeting rule, but it would be simpler to communicate. | neutral | 2 |
The Congressional Budget Office (CBO) estimates that federal tax increases and spending cuts will slow the pace of real gross domestic product (GDP) growth about 1-1/2 percentage points this year.3 Tight fiscal policy may also be preventing faster reductions in unemployment. | dovish | 0 |
A second set of circumstances in which deflation or very low inflation may pose significant problems is potentially more relevant to the current U.S. economy. | dovish | 0 |
And, and that’s why we have adopted the flexible average inflation-targeting framework. | dovish | 0 |
This aggregate growth-accounting framework forms the economic underpinning of key comprehensive productivity statistics produced by the Bureau of Labor Statistics. | neutral | 2 |
The complementarity of price stability with the other goals of monetary policy is now the consensus view among economists and central bankers. | hawkish | 1 |
The emphasis was on providing currency and reserves to meet seasonal demands and on assisting banks in accommodating the credit needs of commerce and business. | dovish | 0 |
Historically, recessions often occurred when the Fed tightened to control inflation. | neutral | 2 |
Consistent with the view that recent lower inflation readings could be temporary, a number of participants mentioned the trimmed mean measure of PCE price inflation, produced by the Federal Reserve Bank of Dallas, which removes the influence of unusually large changes in the prices of individual items in either direction; these participants observed that the trimmed mean measure had been stable at or close to 2 percent over recent months. | neutral | 2 |
I’m just saying, that, that is what fiscal policy can do that, really, monetary policy can’t do—is, is invest in the future productive capacity of the economy, raise potential growth. | neutral | 2 |
We had a 10 percent unemployment rate, and our congressional mandate is maximum employment and price stability. | dovish | 0 |
The staff viewed the uncertainty around its December projections for real GDP growth, the unemployment rate, and inflation as similar to the average of the past 20 years. | neutral | 2 |
Increases in the prices of energy, other commodities, and non-oil imports, as well as reports from some business contacts that higher costs were increasingly being passed through to prices, suggested that the downtrend in inflation had ended. | hawkish | 1 |
Conditions in the commercial paper (CP) market improved over the intermeeting period, likely reflecting recent measures taken in support of this market, greater demand from institutional investors, and the passing of year-end. | dovish | 0 |
Some participants noted that communications about the appropriate path of policy would be a focus of market participants in the current environment and commented that it would be important to emphasize that the Committee's reaction function or commitment to its monetary policy framework had not changed. | neutral | 2 |
I think it would be naive to assume that circumstances would not arise in which the central bank faced short-term choices between inflation stability and economic or financial stability. | neutral | 2 |
However, household spending had been relatively robust during the cyclical downturn and likely had only limited room for a pickup over coming quarters, and intense competitive pressures could well constrain profits, investment, and equity prices. | neutral | 2 |
The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee's assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time. | neutral | 2 |
Indeed, virtually every forecast projects a modest rise in broad measures of U.S. inflation this year, reflecting the dissipation or reversal of favorable supply shocks, most importantly the reversal in the path of oil prices, the stabilization of commodity prices and non-oil import prices, and some rebound in health care costs. | hawkish | 1 |
Although in a number of sectors of the economy the imbalances between demand and supply—including labor supply—are substantial, I do continue to judge that these imbalances are likely to dissipate over time as the labor market and global supply chains eventually adjust and, importantly, do so without putting persistent upward pressure on price inflation, wage gains adjusted for productivity, and the 2 percent longer-run inflation objective. | neutral | 2 |
As I mentioned, monetary policy operates with lags, so, the policies we have in place, we think, will gradually—only gradually—move inflation back to 2 percent. | hawkish | 1 |
If inflation remains higher during the course of 2022, then we may already have met that test by the time we reach liftoff. | neutral | 2 |
This automatically pushes up domestic interest rates to support the currency. | hawkish | 1 |
Indeed, some members saw underlying inflation as relatively stable and put low odds on the possibility that prices now were accelerating. | neutral | 2 |
Committee Policy Action Committee members saw the information received over the intermeeting period as suggesting that economic activity was expanding at a moderate pace. | hawkish | 1 |
Also, the recent evidence could be interpreted as indicating that the surprisingly sharp decline in measured inflation in 2003 exaggerated the drop in the underlying rate of inflation. | dovish | 0 |
The corresponding depreciation in other countries currencies will result in a gradual increase in the foreign currency price of U.S. exports, compared to the prices of foreign produced goods. | dovish | 0 |
The latter could well be augmented by sharply rising medical costs and by attempts to protect the purchasing power of wages from the erosion caused by the rise in energy prices. | hawkish | 1 |
In response to the resulting high inflation, the Fed was obliged to raise interest rates, and the economy weakened. | hawkish | 1 |
So let me start with the question pertaining to exchange rates. | neutral | 2 |
In contrast, the past few cycles did not see this kind of behavior, and in each case, financial imbalances, rather than goods and services inflation, were notably elevated at the onset of the downturn. | hawkish | 1 |
The members concluded that retaining a risk statement weighted toward more inflation pressures would best represent their current thinking, but they believed it was desirable to provide some recognition of the emergence of increased downside risks to the economic expansion in the statement to be released after this meeting. | hawkish | 1 |
Presumably even normal amortized equity that did not come from higher home prices was extracted in this manner. | neutral | 2 |
To this end, the new statement conveys the Committee's judgment that, in order to anchor expectations at the 2 percent level consistent with price stability, it "seeks to achieve inflation that averages 2 percent over time," and—in the same sentence—that therefore "following periods when inflation has been running persistently below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time." | dovish | 0 |
Conversely, fiscal policy expansion in the surplus countries could be used to augment domestic demand, but any such adjustments would need to take account of medium-term goals for fiscal consolidation. | dovish | 0 |
This was also an era when the principal mortgage lenders, savings and loans, were sometimes constrained from satisfying mortgage demands by binding Regulation Q ceilings that eroded their deposit base when interest rates rose. | neutral | 2 |
So negative interest rates is something that we looked at during the financial crisis and chose not to do. | neutral | 2 |
And in so far as that will affect monetary policy, of course we will have to factor those policies along with many other things, including the global environment and oil prices and other matters. | neutral | 2 |
Moreover, most members saw substantial downside risks to the economic outlook and judged that a rate reduction at this meeting would provide valuable additional insurance against an unexpectedly severe weakening in economic activity. | dovish | 0 |
Any of these factors might imply that the equilibrium rate relevant for policy returns more quickly to, or even moves above, its long-run level as fewer forces weigh on aggregate demand. | neutral | 2 |
The ultimate responsibility for price stability rests with the Federal Reserve. | neutral | 2 |
The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information. | hawkish | 1 |
The persistence of underutilized resources was expected to foster some moderation in core price inflation. | neutral | 2 |
White-collar, high-skilled employment increased at a much faster rate than employment in the other categories in nearly all cases in the G-7 countries over 1979-95. | neutral | 2 |
Under pure monetary targeting, interest rates would fluctuate with shocks in spending. | neutral | 2 |
There appears to have been some evolution in inflation-targeting regimes toward greater flexibility. | dovish | 0 |
It is precisely because none of these preconditions hold that monetary policy is so difficult and principles are needed to guide its implementation. | neutral | 2 |
With appropriate firming in the stance of monetary policy, participants expected inflation to return to the Committee's 2 percent objective over time and the labor market to remain strong. | hawkish | 1 |
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