Dudley (FRB-NY) Impersonates Jackie Mason Doing Hamlet

FRBNY President Bill Dudley spoke at the Japan Society in NYC today. His speech titled, “Lessons at the Zero Bound: The Japanese and U.S. Experiences,” was long and long-winded, and reminiscent of Hamlet’s famous soliloquy. The Fed may either increase or decrease its QE purchases “[b]ecause the outlook is uncertain, I cannot be sure which way--up or down--the next change will be.” Near the end of his speech, he dwelled on how the markets might overreact to what the Fed does or doesn’t do:

There is a risk is that market participants could overreact to any move in the process of normalization. Indeed, there is some risk that market participants could overreact even before normalization begins, when the pace of purchases is adjusted but the level of accommodation is still increasing month by month. Not only could such responses threaten financial stability, but also they might make it harder to calibrate monetary policy appropriately to the economic situation. We will need to think long and hard about how best to develop policy in a way that enables us to respond flexibly to a changing economic outlook, but in a way that is not disruptive to the economy.

Picture Jackie Mason playing Hamlet: "To be, or not to be--that is the question. Oy!"