With last week’s FOMC meeting over, which means Fed members are speaking once again, reflecting on the June meeting and looking forward to future decisions. Here is a breakdown of the content given by the five Fed members who appeared publicly this week so far.
William Dudley
New York Fed President Dudley stated that inflation, which is closer to 1.5% than 2% as measured by the PCE, is on the low side but he is happy with the progress made on the headline employment numbers. Given the low inflation, future rate hikes are not as certain as they were a few months ago.
Charles Evans
Chicago Fed President Evans was focused on the “low inflation” as while, wanting to emphasize the alleged importance of making sure the public knows that the Fed is going to be doing something about the low inflation problem. Apparently, the “public” is worried that their costs of living aren’t going up fast enough and needs confidence that the Fed will sweep in to the rescue in such a dire situation. “We have to assure the public that we recognize the new low-inflation environment and that we are not overly conservative central bankers who see our inflation target as a ceiling,” Evans said, according to Bloomberg. Of course, the opposite is the truth. The Fed has been overly extreme in its monetary expansion and reckless interest rate suppression.
Stanley Fischer
Fed Vice Chair Fischer focused on the steps that must be done to prevent another financial crisis. His focus, naturally, was on government regulation including oversight of lending practices and bank stress tests. As always, there was no mention of the danger to financial stability caused by artificial expansion of the money supply and the suppression of interest rates, which encourages speculation and diverts resources into “investments” which otherwise would not have been funded if it wasn’t for the Fed’s easy money regime in the first place.
Eric Rosengren
The Boston Fed President almost stumbled onto the right track when he said that persistently low interest rates may raise concerns about financial stability. Unfortunately, all he meant was that the Fed needed to be prepared to “act” (which of course means print more money) in response to possible negative shocks. It seems there was no realization about the reality sitting right under his nose: the Fed’s previous course of action is what led interest rates so low in the first place!
Robert Kaplan
Dallas Fed President pointed to the low yields on the 10 year Treasury as a sign that investors were anticipating slow growth in the years ahead. Because of this, Kaplan warned about being too hawkish on monetary policy and moving to remove “accommodation” too early. That is, the Fed’s quadrupling of the balance sheet over the last decade hasn’t actually provided for a robust economy and now the Fed is stuck having to prop it up with easy money.
