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Goldman Post-Mortem: Minutes Have More Hawkish Tone
Via Goldman's Jan Hatzius,
BOTTOM LINE: The July FOMC minutes generally had a slightly hawkish tone, emphasizing that labor market slack had improved faster than expected and that the labor market was now closer to what might be considered normal in the longer run. Separately, there was an extended discussion of exit strategy, at which the Board staff laid out a framework that was well received by meeting participants.
MAIN POINTS:
1. Regarding the assessment of the labor market, many Committee members agreed that a number of indicators of labor market conditions had "improved more in recent months than they had anticipated earlier." Many members further noted that the FOMC statement's "characterization of [significant] labor market underutilization might have to change before long, particularly if progress in the labor market continued to be faster than anticipated." The broader set of meeting participants agreed that the rate of improvement in the labor market had been faster than anticipated, and that "conditions had moved noticeably closer to those viewed as normal in the longer run." Overall, these remarks suggest that the change in the labor market language found in the July FOMC statement—shifting focus to broader labor market indicators rather than the unemployment rate specifically—was not intended to be a dovish change, as some commentators thought at the time. To the contrary, the discussion of labor market developments in the minutes had a hawkish tilt.
2. In a similar vein, the staff revised down its estimate of potential GDP growth, in light of the continued outperformance of labor market indicators despite disappointing GDP growth. This suggests that the staff reduced their estimate for the size of the output gap, a slightly hawkish signal.
3. The discussion on inflation was less substantive than on the labor market, with "most" participants now judging that downside risks had diminished. Committee members agreed that it was appropriate to recognize that inflation had moved closer to the Committee's objective in the statement, suggesting that they viewed the recent uptick in the inflation trend as having some staying power.
4. The recovery in housing was described as "slow" by most participants, facing headwinds such as high levels of student loan debt and tight access to credit. Some felt that "factors restraining residential construction might persist, damping the housing recovery for some time."
5. On financial imbalances, participants noted some evidence of stretched valuations in specific markets, but on the whole felt that the phenomenon was not widespread and that "vulnerabilities in the financial system were at low to moderate levels." This is consistent with prior communications from Fed officials.
6. There was an extended discussion of exit strategy. The staff presented a "possible approach," for which participants "expressed general support." Key aspects of the approach apparently included: (1) continuing to target a range of 25 basis points for the federal funds rate (i.e., the first hike could be a move to a target range of 25 - 50 basis points); (2) the top of the range would be set equal to the interest rate paid on excess reserves (IOER) and the bottom of the range set equal to the rate on the fixed-rate O/N RRP facility; (3) the size of the O/N RRP facility should "be only as large as needed to effective monetary policy implementation and should be phased out when it is no longer needed for that purpose"; and (4) most favored reducing or ending portfolio reinvestment after the first increase in the target range for the fed funds rate. Some felt that the O/N RRP rate should be set below the bottom of the target range, which would further discourage use of the facility, but many participants thought such a strategy would provide insufficient control over the level of rates.
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CFTC Confirms Its Reported Gold And Silver Market Data Is Erroneous - CoinWeek | CoinWeek
Con week
noted some evidence of "stretched" valuations in specific markets.
Stretched? Like a vagina or asshole?
I have said this for 5 years now.
The FED is setting Obama and the democrats up for the biggest fall in history, by tightening near the end of his term, which in turn will crash the system. This is exactly what happened to Bush, tighten in '06, crash in '08. It is how the FED/banks maintain power over the political process.
In each cycle the banks lay claim to more power to "save" us from the credit engineered collapse, and the newly incoming party goes along.
We have to wait until July 2016? UGH.
But Ben promised rates would not rise in his life time.
I guess this means bye-bye;)
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Print Less but Transfer Morehttp://www.foreignaffairs.com/articles/141847/mark-blyth-and-eric-lonerg...
Helicopter Ben is coming!
July 2026 would be a more practical unwind timeline.
No one has that kind of patience.
Both
Business Insider bans reader comments on all stories related to Ferguson:
http://tinyurl.com/laga2ye
The market never over shoots....
Or under delivers!
Just a suggestion: Fed minutes shouldn't have more potential interpretations (and secondary literature) than Kafka's 'Metamorphosis."
Moar shadow puppet theatre from the Fed. and the Squid.
The 35.4 Percent: 109,631,000 on Welfare | CNS News
When those receiving benefits from non-means-tested federal programs — such as Social Security, Medicare, unemployment and veterans benefits — were added to those taking welfare benefits, it turned out that 153,323,000 people were getting federal benefits of some type at the end of 2012. The 153,323,000 total benefit-takers at the end of 2012, said the Census Bureau, equaled 49.5 percent of the population.
Then throw in everybody living off of: Big-Ag, Big-MIC, Big-Road, Big-Water, Big-Airport, Big-FIN, Big-ED, Big-Energy, & Big-PoliceState and THEN what percentage of the country is on "welfare"? More than half, that's for sure.
Everybody loves socialism, except for what the other guy gets.
There is no economy without welfare in all it's forms.
In an actual Republic, this would be the useless, pointless banter of inmates on death row.
In an oligachy, it is termed: "market direction" from those "in the know"
That's why the smart-n-savvy people don't allow these "Republic" things.
They do create some really good bullshit about spreadin freedum-n-democracy tho.
Is the recovery here? Just raise the prime rate to 4% and raise it 0.25% per quarter until you get to 6%.
Go on, I dare ya'. Otherwise, get a real job.
END THE FED!
Raising rates is no way to sustain a debt-fueled ponzi. I eat a whole cold can of vienna sausage if they do.
Rising rates would = death spiral.
Move along, nothing happening here that you won't see in 36 months.
they will raise it like 20bps or something to make it look nano creditable. Obviously the sovereigns won't buy it, but who cares when they can still chump the retails masses for a final clean out of the closet.
No creditor nation really give 0.2cents what the Fed says nowadays anyway. Only CNBC, Fox and nations with their CCY attached to the defunct dollar.
Fed will have a plan to milk it even when it goes. Remember they don't work for the US government, and they sure hell don't work for the US citizens. They work for their shareholders, which are the banksters. Enough said.
I feel like im watching the kings court: hear say, jesters and marry men. Its so barbaric that it makes great satire.
What did the kings jester say to the king, what did the king say to the peasent, what did the king say to the....etc.
Is this 13th century court politics or what?
If Yellen gets a undercooked potato is that good or bad for the economy?
look at thirty years of the fed 'raising rates'. they will raise rates a quarter point for a few years and then drop them negative after that ----AT WORST.
more likely there is simply NO MORE ROOM to raise rates. the only option now is to keep printing money no matter what. weimer full steam ahead.
the mike shedlock's of the world will scream credit crisis makes hyperinflation impossible.
they simply misunderstand hyperinflation. hyperinflation is the volumeless meltup of remaining stocks and capital assets on the shelves. there's less and less left to buy. anything not nailed down to the floor is being looted stolen or 'bought' with fake money.
gold price will melt up or even stay steady---but the availability of REAL physical gold will eventually dwindle to nothing.
as less and less is left the credit crisis becomes a political crisis. and paper money is either unable to produce wealth, or is hyperinflated. either way the paper money printing comes to an end because the unotward DEBTS of the nation layer over it like a political slime. slowly choking the victim while random academics who still have jobs 'argue' about what kind of death throes are being experienced.
I wish i could disagree. Hyperinflation is the loss of creditablity of an issuer.
There was a paragraph in when money dies writen by a dipomat that aways haunted me.
let me try and paraphrase an english dipomat to Germany: " I saw two old women outside my car while stopped in traffic. These women were argueing about the price of food/rent. So i gave them both all i had on me of the worthless currency and they came to blows over what i had given them."