Wednesday, January 14, 2015

Two More Patient FOMC Officials
On Monday, Bloomberg reported that both FRB-San Francisco President John Williams and FRB-Atlanta President Dennis Lockhart expect to vote on the FOMC to start raising interest rates around mid-year. The minutes of the December 16-17 FOMC meeting suggested that lift-off could start at the April 28-29 meeting. More likely now is that the statement released immediately after that meeting might prepare the financial markets for such a decision at the June 16-17 meeting, which will be followed by a press conference with Fed Chair Janet Yellen.

However, Williams, who was the director of research when Yellen ran the FRB-SF until he succeeded his boss when she left during March 2011, hedged his bet, saying in the phone interview with Bloomberg:
I would expect by June that the argument pro and con for lifting off rates will be probably a close call. … If inflation data come in significantly softer than expected and we’re not seeing some kind of better growth in wages, those are clearly factors that I’d be taking into consideration in the timing of liftoff.
In a speech in Atlanta on Monday, Lockhart said:
At the recent meeting of the FOMC in December, the Committee made an adjustment of its forward guidance by introducing the theme of patience in beginning to normalize the stance of policy. I supported and expect to continue to support a patient approach, one that is relatively cautious and conservative as regards the pace of normalization of rates.
(Based on an excerpt from YRI Morning Briefing)

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