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Hilsenrath Warns Fed Rate-Hike Timing Debate Intensifying

Tyler Durden's picture




 

The Wall Street Journal's Jon Hilsenrath unleashed an instantaneous reaction to today's FOMC minutes and the message is clear - markets are much less uncertain than the Fed about the timing (sooner rather than later) of the first rate-hike. The minutes of the meeting, Hilsy notes, provide fresh evidence of an intensifying debate inside the central bank about when to respond to a surprisingly swift descent in the unemployment rate and rising consumer prices. The minutes appeared to reflect a slightly more aggressive stance than Ms. Yellen's testimony.

 

Via The Wall Street Journal,

Federal Reserve officials debated at their July meeting whether to move sooner than expected to start raising interest rates in light of an improving job market and rising inflation, but decided they needed more evidence before concluding that was the right approach.

The minutes of the meeting, released Wednesday, provide fresh evidence of an intensifying debate inside the central bank about when to respond to a surprisingly swift descent in the unemployment rate and rising consumer prices.

Most officials agree they are seeing progress away from high unemployment and very low inflation. Some believe this warrants moving toward tighter credit conditions but many others remain unconvinced.

"Many participants noted that if convergence toward the [Fed's] objectives occurred more quickly than expected, it might become appropriate to begin removing monetary policy accommodation sooner than they currently anticipated," said the minutes of the July 29-30 meeting.

"Most participants indicated that any change in their expectations for the appropriate timing of the first increase in the federal funds rate would depend on further information on the trajectories of economic activity, the labor market, and inflation," the minutes said.

Among their concerns: The economy's first-quarter contraction, though seemingly temporary, caused uncertainty about the outlook, as did turmoil in the Middle East and Ukraine, persistent weakness in the housing sector and slow-growing household incomes.

Short-term U.S. rates have been held near zero since December 2008. Most Fed officials believe they can wait until 2015 before raising rates and have encouraged a perception in markets that rate increases won't start until the middle of the year.

Fed Chairwoman Janet Yellen said in testimony to Congress in July that rate hikes might come sooner than planned if unemployment continues to fall faster than expected and if inflation—which has been below the Fed's 2% target for more than two years—moved rapidly toward the goal. The jobless rate was 6.2% in July, down from 7.3% a year earlier.

The minutes appeared to reflect a slightly more aggressive stance than Ms. Yellen's testimony. She balanced her discussion of early rate hikes by also noting rate increasess might be delayed if the economy underperforms. At the July policy meeting, however, discussion seemed to focus on the possibility of early increases and not late increases.

"Some participants viewed the actual and expected progress toward the [Fed's] goals as sufficient to call for a relatively prompt move toward reducing policy accommodation to avoid overshooting the [Fed's] unemployment and inflation objectives over the medium term," said the minutes, which don't identify the participants by name or specify the number who held certain views.

The Fed has been saying for months it expects to keep rates near zero for a "considerable time" after it completes a bond-buying program in October. Officials who want early rate increases are pushing the central bank to drop that guidance.

"The guidance suggested a later initial increase in the target federal funds rate as well as lower future levels of the funds rate than they judged likely to be appropriate," the minutes said.

Ms. Yellen will deliver remarks at the Kansas City Fed's gathering in Jackson Hole, Wyo., on Friday, a chance for her to update the public on her views about how the job market is progressing.

While officials debate the timing of rate increases, they are making progress on ironing out details of how to raise rates. Minutes showed they agreed they will use two levers—interest they pay banks on reserves and interest they pay others such as money market mutual funds—to keep short-term rates in a gradually rising band once the time for rate increases begins.

 

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Wed, 08/20/2014 - 14:19 | 5121157 Latina Lover
Latina Lover's picture

Blah blah blah, more BS from the Central Planners.  I'd rather watch grass grow than listen to these liars.

Wed, 08/20/2014 - 14:27 | 5121223 FuzzyDunlop21
FuzzyDunlop21's picture

Theyre just testing the waters here. If the market gets pissy Mr. Chairsatan herself will come out and say 'lol j/k', just like Bernanke did after he said the t-word. At which time the market not only recovers all previous losses, but goes to new all time highs just for the fuck of it. 

Either way, the important point is they care more about how they are perceived, rather than how destructive their policies are. The Fed has and always will have PR be its main priority. 

Wed, 08/20/2014 - 14:31 | 5121246 TeethVillage88s
TeethVillage88s's picture

There is no incentive to Fix Credit Markets, unless they raise rates.

But they won't raise rates, as you say, this is a Dog & Pony Show.

Wed, 08/20/2014 - 14:40 | 5121300 WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture

"Ms. Yellen will deliver remarks at the Kansas City Fed's gathering in Jackson Hole, Wyo., on Friday......"

Must be safer to meet in JHole than KC,MO.  Pussies.

 

 

 

 

Wed, 08/20/2014 - 14:49 | 5121319 nope-1004
nope-1004's picture

Amazing how slow the FED sends the article over for Hilsy to autograph vs their HFT market rigging machines.

But it's time for actual action.  Let's raise rates.  C'mon mouthpieces.... either do it or STFU because talking about it gives the world the perception that "talk" is the Fed's only policy tool left (which it is, but I digress).

So raise rates.  Let do this.

Anything else is LYING.

Wed, 08/20/2014 - 14:53 | 5121364 y3maxx
y3maxx's picture

...FED is finally out of Ammunition.

World War is up next.

Stay safe ZH'ers.

Wed, 08/20/2014 - 15:05 | 5121449 MalteseFalcon
MalteseFalcon's picture

I'm not sure they are out of ammo, yet.  They're just having some fun.  What's the fun of being a puppeteer if you can't give the strings a yank once in a while?

When they are out I agree.  It's a 3 letter word beginning with 'w' and ending with 'r'.

Wed, 08/20/2014 - 15:11 | 5121480 centerline
centerline's picture

They never had ammo.  Just an empty gun.

Wed, 08/20/2014 - 15:13 | 5121498 RighteousDude
RighteousDude's picture

To me it's all about the math and politics.

Sure, they can slowly raise rates, right up until they realize the DEFICT will rise in lock step, creating intense political blowback, resulting in apologies and pleas for forgiveness.....

Wed, 08/20/2014 - 14:33 | 5121258 B2u
B2u's picture

watching grass grow is too much...I'd rather watch dust accumulate.

Wed, 08/20/2014 - 15:14 | 5121502 yogibear
yogibear's picture

Bernnie Madoff has met his match, it's called the Federal Reserve bank.

Their Jester Hilsenrath is spewing more disinformation and BS.

The Federal Reserve bank has become a joke.

Wed, 08/20/2014 - 14:18 | 5121158 ebworthen
ebworthen's picture

Yup, green shoots, things are looking great, better raise those rates ASAP.

Then housing will take off, and auto sales, and hiring, and disposable income.

Wed, 08/20/2014 - 14:39 | 5121293 Alea Iactaest
Alea Iactaest's picture

CAT, LOW, HTZ, TGT all agree (in the last 24 hours). They all have too much business, in fact.

Wed, 08/20/2014 - 14:20 | 5121163 Bill of Rights
Bill of Rights's picture

Check out the DXY

https://www.tradingview.com/x/d0lu8mPx/

 

Gold getting Monkey hammered

 

https://www.tradingview.com/x/4sgOuT9J/

 

 

 

Wed, 08/20/2014 - 14:26 | 5121216 blabam
blabam's picture

Meh.

Wed, 08/20/2014 - 14:19 | 5121164 Ban KKiller
Ban KKiller's picture

Know your enemy...banksters!

http://fsroundtable.org/board-of-directors/

Do you know of Northern Trust? Just one of the masters...of lies. 

Wed, 08/20/2014 - 14:19 | 5121170 saints51
saints51's picture

Ok so corporations do not hire anyone and show negative progress from economic indicators. Keeps the FED injecting money 4EVA. BTFD!!!!

Wed, 08/20/2014 - 14:20 | 5121177 SteveNYC
SteveNYC's picture

Sure Jon. I think I recall this headline from 2010........

Wed, 08/20/2014 - 14:27 | 5121220 Bay of Pigs
Bay of Pigs's picture

Hilsengreen has zero cred. Fuckan buffoon.

Wed, 08/20/2014 - 14:43 | 5121313 TeethVillage88s
TeethVillage88s's picture

Real agenda could be:

A) When to implement EU & US Bail-Ins
B) Does everyone agree to War again in Iraq & Ukraine?
C) Is the UK on board for Bail-Ins?
D) We welcome Asian Members to the Club, they now own 10% of US Assets valued at $10 Trillion
E) Guidance will be to move Investments toward hard assets like apartment buildings, Farm Land, Resort Property, and Energy & Water producing Lands & Concerns
F) Privatization in the US has a ways to go at this point, however state & county debt levels & University Debt levels are now in place to provide the basis for planned Privatization drives in 2015

Wed, 08/20/2014 - 14:25 | 5121179 Tenshin Headache
Tenshin Headache's picture

OT new Ebola numbers out from WHO ... 1350/2473

http://www.who.int/csr/don/2014_08_20_ebola/en/

edit: CFRs Guinea 68%, Liberia 59%, Nigeria 27%, Sierra Leone 41%

Wed, 08/20/2014 - 14:27 | 5121214 ClowardPiven2016
ClowardPiven2016's picture

I think Vegas has the over/under set at 50,000,000

Wed, 08/20/2014 - 14:40 | 5121299 Alea Iactaest
Alea Iactaest's picture

now THAT is how a QE graph should look!

Wed, 08/20/2014 - 14:22 | 5121189 ekm1
ekm1's picture

World no longer cares about the Federal Reserve, what it says, who is leading it and what it does.

Nobody gives an excrement any longer.

 

CURRENCY WAR- - - - DEAD

FINANCIAL WAR- - - - -DEAD

 

BULLET AND MISSILE WAR-----ONGOING

 

Nobody cares about computers and digits on computers now.

Beheadings, gassing of people, mass shooting, land grab by force and shooting of airplanes has taken over.

 

We live in a different world now.

 

 

Wed, 08/20/2014 - 14:25 | 5121203 saints51
saints51's picture

I wouldn't say we live in a different world. I would say the men behind the curtains are not hiding anymore. Its always been the same game.

Wed, 08/20/2014 - 14:30 | 5121226 ekm1
ekm1's picture

Absolutely no objections.

 

I stand corrected:

World is appearing different.

 

Players who used to steer the wheel from the shadows like Warren Buffett are now openly in the forefront.

Wed, 08/20/2014 - 14:37 | 5121275 saints51
saints51's picture

Exactly. These guys just do not give a shit anymore. The funny thing about the whole situation is the MSM glorifies these assholes. They went from who the hell is that, too celebrities.

Wed, 08/20/2014 - 14:42 | 5121308 Alea Iactaest
Alea Iactaest's picture

Easy to be bold now that everyone knows what your security team looks like.

And we haven't even seen the really cool stuff like ultrasonic crowd dispersal, yet.

Personally I'm waiting for the first domestic drone strike.

FSA has no idea what's coming.

Wed, 08/20/2014 - 14:28 | 5121230 centerline
centerline's picture

+1.  Financial crisis now morphing into a sovereign/political crisis which of course moves from currency wars to trade wars and eventually to shooting wars.  We are proxy mode right now for the shooting wars.

The FED can go fuck itself.  No one is moved anymore by the jawboning.  Everyone knows the FED is nothing more than smoke and mirrors, markets are rigged, munis/pension funds have financial guns to thier heads, political systems are bought and paid for, etc.

FED is pushing on a rope and they know it.

Wed, 08/20/2014 - 14:42 | 5121312 Alea Iactaest
Alea Iactaest's picture

Morphing by design. Can't have people pointing at the REAL puppet masters.

Wed, 08/20/2014 - 14:48 | 5121337 centerline
centerline's picture

Ya wanna know what the real trick will be in the end?  The finger gets pointed at the people themselves.  And by then, there will be enough guilt to go around to sell it.

Just unreal how it all unfolds.

Wed, 08/20/2014 - 14:23 | 5121190 himaroid
himaroid's picture

People will soon be shocked to learn that the fed has zero control over long rates. They struggle to keep them up. Not going to work.

Wed, 08/20/2014 - 14:30 | 5121193 Chuck Knoblauch
Chuck Knoblauch's picture

Ferguson, MO was a pre-game warm-up.

This is going to get interesting when it hits the larger cities.

Especially in the South West.

Black communities are going to get hit by the Tsunami wave first.

The dominos will begin to collapse.

The real problem are the external agitators who will stir up trouble.

And it will spread.

Wed, 08/20/2014 - 14:25 | 5121201 crzyhun
crzyhun's picture

Sad, Fed officials are taking that hopium drug again. Sad it turns your mind into week old jello.

Wed, 08/20/2014 - 14:26 | 5121212 SheepDog-One
SheepDog-One's picture

Fed good cop-bad cop routine....I'll believe a rate hike when I see it other than that it's all pure BS.

Wed, 08/20/2014 - 14:28 | 5121227 saints51
saints51's picture

I agree Sheep. Its just a big ass shakeout.

Wed, 08/20/2014 - 14:31 | 5121249 Chuck Knoblauch
Chuck Knoblauch's picture

The only asses in this market are involuntary pensioners with no way out,

Wed, 08/20/2014 - 14:37 | 5121286 centerline
centerline's picture

I think that is where it all comes apart too.  Just like ancient Rome.  Soldiers, cops, etc. all looting the crap out of the system for what they were promised but the politicians failed to deliver.  The last acts will be massive screwing of everyone by everyone. 

Wed, 08/20/2014 - 16:11 | 5121740 cougar_w
cougar_w's picture

And people dare wonder what is behind the looting in Ferguson.

Everyone is in on the end-game whether they will it or no. That is why the fire will come furiously and from all directions when finally it comes.

Wed, 08/20/2014 - 16:14 | 5121745 centerline
centerline's picture

It is what scares me the most (for my family more than myself).

Wed, 08/20/2014 - 15:06 | 5121331 passenger_pidgin
passenger_pidgin's picture

Perhaps this is why they finally feel good about raising rates.  Perhaps our economy has hit the Max Pain threshold (as seen by recent US consumer spending plateau and decline).  Consumers are already tapped beyond maximum, trying to keep up with their bills.  Raising rates by October will ensure that they can signal the "correction" (the stripping of retirement accounts), and blame the outcome (crisis) on Ebola, Putin, ISIS, racism, and domestic terrorists (those with an IQ high enough to remember anything from a political science or government class).  Afterwards, bubble blowing can resume as normal.  By then, these will have seemed like the good ol' days.

Forward!!!

Wed, 08/20/2014 - 16:17 | 5121752 cougar_w
cougar_w's picture

They do want the retirement accounts, that is certain. They've lured everyone with retirement money into equities, perhaps for the very reason you describe.

However, raising rates and blowing up the world is wildly deflationary. And the problem with that is you don't know either where it will end, or who all will be devoured by it. Seems like a very risky way to "get those static non-productive accounts".

I don't know. I have the suspicion the pukes at the Fed are not as smart as we are hoping they are, and really simply do not have a plan at all.

Wed, 08/20/2014 - 17:51 | 5122252 passenger_pidgin
passenger_pidgin's picture

I agree with you cougar, about pretty much all of what you said.  With regards to the anti-mandated deflation, I think that the crisis moment will be a somewhat instantaneous write-down, which will allow new bubbles, once the croupier clears the table.  As far as the tools at the FED, they may not be too smart, but I think that that's why they are there (like our last several presidents).  Didn't Greenspan "earn" his place at the FED by perpetuating the Keating fraud?  My opinion is that the ones pulling the strings have a plan; but, I will admit it is possible that the "planners" have lost touch with their ability to achieve their goals.

In any case, it seems like the recent goal has been the destruction of value(s).  I think about the movie Hudson Hawk - the bad guys' plans for world domination was centered around flooding the markets with phyzz. Today, of course, TPTB have avoided the "alchemist" route by flooding the markets with paper. 

This brings me to effectively the same place as yourself- there are two possibilites, and I oscillate between them in what I think is true.

1) The conspiracy is large and in charge - if this is the case, then the key is to get insider info, and to ride the coat tails of the planners to victory (or at least to a reasonably comfortable life).

2) The conspiracy is arrogant and shortsighted - if this is the case, then keep stackin' because price discovery will eventually make us rich!

I don't know either, cougar. These are strange days, to be sure. I agree that deflation is risky to the banksters, but much less so when peons have no cash to spend.  Besides, the ISIS, Ebola, and Putin games all seem pretty risky, too (as well as the dumbing down of America).  Thanks for the feedback!

Wed, 08/20/2014 - 14:28 | 5121222 buzzsaw99
buzzsaw99's picture

tripe

Wed, 08/20/2014 - 14:27 | 5121224 Bastiat
Bastiat's picture

Talk is cheap -- just more jawboning the dollar.   Raise rates?  Good luck to: what's left of the US Economy, the US Government Budget and Income Statement, the Fed's Portfolio.

Wed, 08/20/2014 - 14:30 | 5121243 LawsofPhysics
LawsofPhysics's picture

If the "economic gains" are real, a rate hike is overdue and appropriate.  If there is no rate hike, well, then I guess we know what they really think about the economy.

Wed, 08/20/2014 - 14:36 | 5121266 Loucleve
Loucleve's picture

persistent weakness in housing?  how did Bloomberg CNBC et al miss that?

Wed, 08/20/2014 - 14:31 | 5121248 jay28elle
jay28elle's picture

BFD, BTFD

Wed, 08/20/2014 - 14:43 | 5121318 Alea Iactaest
Alea Iactaest's picture

Sell bonds now!

Wed, 08/20/2014 - 14:33 | 5121260 Joe Tierney
Joe Tierney's picture

Yeah - if they raise rates the Fed's Fartpolio ($4++ trillion frickin' paper assets) will implode like the black hole it really is, taking the rest of the fiat banking system in the West with it.

 

I sure hope all you Bozos holding Treasury bills have lots of shit up your asses, because you're going to need those bills for toilet paper when the Big Dump happens.

Wed, 08/20/2014 - 14:53 | 5121374 cougar_w
cougar_w's picture

I just cannot see how they can ever raise rates. Not for a generation at least.

So can they end QE? Doesn't that mean then that the Fed has to buy all those UST issues themselves? Can they even do that, in any real sense?

I have been saying for 4 solid years they cannot end QE, and I still don't see any viable exit (unless they are willing to let UST go without bid -- my god) So how the hell does this story end? How can they ever close the book?

I guess events will have to take over and end the story for them while they stand shaking in their boots unable to move in any direction. Sounds unorderly to me. Sounds like one of the inner rings of economic Hell, to me.

Wed, 08/20/2014 - 15:13 | 5121496 centerline
centerline's picture

You said it C.  The books wont be closed.  Rather, the system will be terminated, thrown out, and restarted.

Wed, 08/20/2014 - 14:36 | 5121264 Chuck Knoblauch
Chuck Knoblauch's picture

The last two years of Obozo's regime are going to be tough.

The Oligarchs are going to want to start a new 8 year run for another puppet in 2016.

So, the post 2014/pre-2016 election period is not looking good at all.

The best time to raise rates actually.

The best of times, the worst of times, right?

Wed, 08/20/2014 - 14:39 | 5121292 The Most Intere...
The Most Interesting Frog in the World's picture

I am so tired of hearing that the Fed is going to or should raise rates.  WHY in the hell would they raise their rates????  Look at the 2yr and 10 yr - you go on down the line.  I agree that at some point their rates should not have been so low, but at this point it is probably exactly where it should be.  If the economy is going to tip over, let it do so under it's own weight.  No need to jack up rates the Fed controls, only to have to reverse course almost immediately which is what it would cause.

Wed, 08/20/2014 - 14:42 | 5121307 Raoul_Luke
Raoul_Luke's picture

Hahaha!  Why should we fear a rate hike?  Obviously, all our economic problems are behind us if the Fed is considering a sooner rather than later rate hike.  All's well that ends well, eh?

Forward!

Wed, 08/20/2014 - 14:48 | 5121342 TabakLover
TabakLover's picture

The FED is stupid...... so they just might raise rtes.

Wed, 08/20/2014 - 14:50 | 5121351 Dead Man Walking
Dead Man Walking's picture

I remember when greenspan raised rates, it tanked us immediately.

Wed, 08/20/2014 - 14:52 | 5121362 rsnoble
rsnoble's picture

" swift descent in the unemployment rate"

What's your decision now you fucking bitch???

Little white lies come back to bite you in your fat ugly fucking ass?

Wed, 08/20/2014 - 15:02 | 5121418 yogibear
yogibear's picture

This guy is like their bitch.

The Federal Reserve bank has become like this BS ponzi scheming house of cards with the joker called Hilsenrath.

You know the Federal Reserve has some real credibility problems when they send this guy out to issue more BS.

Wed, 08/20/2014 - 15:51 | 5121665 Yen Cross
Yen Cross's picture

   This BS with the usd is earily similar to the same crap Carney was pulling with the BoE raising rates until 6-7 weeks ago...The usd isn't going to stay at these levels folks. Energy and other exports will get eaten alive with a stronger dollar.

   The demand for commodities and oil has dropped considerably over the last few months. Has anyone noticed a large drop in fuel or food prices from the stronger usd? I sure as fuck haven't.

Wed, 08/20/2014 - 16:08 | 5121727 cougar_w
cougar_w's picture

What you describe is consistent with a late-end-game strategy. Here is how something like that might play out:

The big players (energy, retail and commodities) know the music has stopped. They've been watching for this exact event for months. They are no longer worried about classic supply/demand dynamics, attracting customers, building pipeline, forget all that they are keeping prices high until the last buyer of anything falls over dead. Arbing the dollar and extracting value -- just grabbing everything you can grab, with both hands -- with no thought for any kind of future.

Wed, 08/20/2014 - 16:17 | 5121754 centerline
centerline's picture

+1 C.  Free-for-all mode.  Right down the line into Main Street.

Wed, 08/20/2014 - 21:30 | 5123257 oooBooo
oooBooo's picture

Do these guys just sit around asking questions of a magic 8 ball? Sure does sound like it.

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