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Hilsenrath Confirms Dovish Fed Talking Down The Dollar

Tyler Durden's picture




 

Federal Reserve officials have become more concerned about weak growth overseas and the impact of a strengthening U.S. dollar on the domestic economy, warns WSJ Fed-whisperer Jon Hilsenrath, adding that, the stronger currency, by reducing the cost of imported goods and services, could hold U.S. inflation below the Fed’s 2% objective. Fed staff also reduced its projection for medium-run growth in part because of these concerns. The minutes showed more clearly than before that concerns about global growth and the disinflationary impact of a strong currency are giving officials additional pause about moving quickly on rates.

 

Via The Wall Street Journal's Jon Hilsenrath,

Federal Reserve officials have become more concerned about weak growth overseas and the impact of a strengthening U.S. dollar on the domestic economy, according to minutes of the Fed’s September policy meeting released Wednesday.

Officials worried at the Sept. 16-17 policy meeting that disappointing growth in Europe, Japan and China could crimp U.S. exports. Meantime, the stronger currency, by reducing the cost of imported goods and services, could hold U.S. inflation below the Fed’s 2% objective. Fed staff also reduced its projection for medium-run growth in part because of these concerns.

The collective worry is added reason for the Fed to hold short-term interest rates near zero, even as the economy improves.

“Some participants expressed concern that the persistent shortfall of economic growth and inflation in the euro area could lead to a further appreciation of the dollar and have adverse effects on the U.S. external sector,” according to the minutes, which were released by the Fed with the traditional three week lag. “Several participants added that slower economic growth in China or Japan or unanticipated events in the Middle East or Ukraine might pose a similar risk.”

These worries about global growth and the economic impacts of a strong dollar represent a new twist in the Fed’s running debate about when to raise short-term interest rates. Officials spent much of the summer discussing the timing and mechanics of rate increases. Many officials expect the first rate increase by mid-2015. An improving U.S. job market led some officials to press for earlier increases.

The minutes showed more clearly than before that concerns about global growth and the disinflationary impact of a strong currency are giving officials additional pause about moving quickly on rates.

The euro is down nearly 8% against the dollar so far this year, with much of the move happening since June. The Wall Street Journal’s broad dollar index is up more than 5%.

There are plenty of benefits from a strong currency. It goes hand-in-hand with capital inflows which could spur domestic investment. It also tamps down inflation and takes pressure off the central bank to push up interest rates.

But officials have been trying to push inflation up, not down, of late because it has run below their 2% goal for more than two years.

Fed officials have started speaking out more about their concerns about the global landscape.

“The appreciation of the dollar and weakening of foreign growth prospects,” in addition to low energy prices, will collectively “damp inflation pressures,” William Dudley, president of the Federal Reserve Bank of New York, said in a speech Tuesday at Rensselaer Polytechnic Institute.

Mr. Dudley added that “the appreciation of the dollar is likely due in part to increasing confidence that growth prospects in the U.S. have improved,” and as such, is a positive vote in favor of the American economy.

While officials debated the impacts of a weakening global environment on the U.S. economy, they pressed ahead with several other issues that have been on the Fed’s agenda for weeks. Among them, when and how to change their guidance to the public about short-term interest rates.

The Fed has been saying since last March that it would keep interest rates near zero for a “considerable time” after its bond-buying program ends. With the program on track to end in October, a debate has heated up about changing the guidance.

“Several participants thought that the current forward guidance regarding the federal funds rate suggested a longer period before liftoff, and perhaps also a more gradual increase in the federal funds rate thereafter, than they believed was likely to be appropriate given economic and financial conditions,” the minutes said. “In addition, the concern was raised that the reference to ‘considerable time’ in the current forward guidance could be misunderstood as a commitment rather than as data dependent.”

The minutes emphasized that the Fed’s decision on rates was in fact dependent on how the economy performed and suggested a shift in the guidance was taking shape.

“Most participants indicated a preference for clarifying the dependence of the current forward guidance on economic data and the Committee’s assessment of progress toward its objectives of maximum employment and 2% inflation,” the minutes said. “A clarification along these lines was seen as likely to improve the public’s understanding of the (Fed’s) reaction function while allowing the Committee to retain flexibility to respond appropriately to changes in the economic outlook.”

 

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Wed, 10/08/2014 - 14:16 | 5304356 ZippyBananaPants
ZippyBananaPants's picture

Exactly what I thought!

Wed, 10/08/2014 - 14:20 | 5304371 Divided States ...
Divided States of America's picture

The true state of the economy means shit to the Fed, its the perception of what their policies are looking forward that matters....and since the markets are actually OBEYING to these stupid Fed minutes, the FED still has the stock markets hijacked....nothing will change.

Wed, 10/08/2014 - 14:21 | 5304381 Pool Shark
Pool Shark's picture

 

 

I told ya they won't raise rates!

 

 

Wed, 10/08/2014 - 14:25 | 5304393 pods
pods's picture

Talking down the dollar?

Is that like when you were a teen in Math class daydreaming about that cutie in the skirt ahead of you and suddenly the teacher calls on you to come up to the board?

pods

Wed, 10/08/2014 - 14:35 | 5304456 SilverIsKing
SilverIsKing's picture

and Gold and Silver barely budge on the 'news.'

Another day in paradise.

Wed, 10/08/2014 - 15:27 | 5304815 zaphod
zaphod's picture

Keeping rates at zero was always a given. The question is when will they print more. Will they wait till the market eventually crashes, or fire up the printers before then.

Wed, 10/08/2014 - 17:35 | 5305527 Hubbs
Hubbs's picture

Bingo.

Wed, 10/08/2014 - 14:27 | 5304403 froze25
froze25's picture

Big surprise, so they won't raise rates.  To bad its because they can't not because of a stronger dollar.

Wed, 10/08/2014 - 14:25 | 5304394 Soul Glow
Soul Glow's picture

So you're saying people actually believe this bullshit?  Amazing.

Wed, 10/08/2014 - 14:30 | 5304421 froze25
froze25's picture

Most of them do, it makes it easier for us.

Wed, 10/08/2014 - 14:23 | 5304374 power steering
power steering's picture

Beware ye ursines the (W)rath of Hilsen

Wed, 10/08/2014 - 14:31 | 5304429 Pooper Popper
Pooper Popper's picture

I didnt believe it was possible,until my sisters,cousins,uncles roomate sold his first one.Now he just sits at home and kicks his dog making big money selling purple elephants.You can do it to.

Just go to      Im a stupid sheep.com

You will be cooler than obama!!!!!!!!

Thats,

Im a stupid sheep ,com

Wed, 10/08/2014 - 14:17 | 5304360 IronShield
IronShield's picture

Hey, forget all that.  We had an Ebola death today; one of many more to come, I fear.

Nothing good comes out of Africa.

Wed, 10/08/2014 - 14:18 | 5304365 pods
pods's picture

Hisenrath, the jew whisperer.

pods

Wed, 10/08/2014 - 14:30 | 5304426 StackShinyStuff
StackShinyStuff's picture

It's Joo (shout out to Francis Sawyer, miss that guy)

Wed, 10/08/2014 - 17:02 | 5305384 Sinnedi
Sinnedi's picture

Nice fed meme anon. "The Third World War must be fomented by taking advantage of the differences caused by the "agentur" of the "Illuminati" between the political Zionists and the leaders of Islamic World. The war must be conducted in such a way that Islam (the Moslem Arabic World) and political Zionism (the State of Israel) mutually destroy each other. Meanwhile the other nations, once more divided on this issue will be constrained to fight to the point of complete physical, moral, spiritual and economical exhaustion…We shall unleash the Nihilists and the atheists, and we shall provoke a formidable social cataclysm which in all its horror will show clearly to the nations the effect of absolute atheism, origin of savagery and of the most bloody turmoil. Then everywhere, the citizens, obliged to defend themselves against the world minority of revolutionaries, will exterminate those destroyers of civilization, and the multitude, disillusioned with Christianity, whose deistic spirits will from that moment be without compass or direction, anxious for an ideal, but without knowing where to render its adoration, will receive the true light through the universal manifestation of the pure doctrine of Lucifer, brought finally out in the public view. This manifestation will result from the general reactionary movement which will follow the destruction of Christianity and atheism, both conquered and exterminated at the same time." 4

 

http://share.pho.to/7Ga8K

Do what the establishment wants you to do. Don't rebel against the real enemies.

Wed, 10/08/2014 - 20:02 | 5306234 pods
pods's picture

Hey how about this?  We take away the power of the banks to conjure up money to lend us?

Then we can have your discussion about some funny hat wearing black pope secret society?

pods

Wed, 10/08/2014 - 14:21 | 5304375 Dr. Engali
Dr. Engali's picture

Sorry, but there are only two things I think of when I hear the word collective.... Communists and the Borg...... okay that's one thing, but still....

Wed, 10/08/2014 - 14:21 | 5304378 huggy_in_london
huggy_in_london's picture

these guys are total jokers.  So they plan to raise rates and they think the USD wont rally on that?  WTF is wrong with these people?

 

imbeciles

Wed, 10/08/2014 - 14:23 | 5304382 himaroid
himaroid's picture

Their bullshit does not carry any weight without fed or taxpayer balance sheet behind them.

Come on weasels, be "long and strong"!

 

Wed, 10/08/2014 - 14:26 | 5304385 The_Dude
The_Dude's picture

Tyler(s)....any chance we can get a forum/discussion section?

Article comments are great but not condusive to hashing out ideas as the threads are often hijacked and discussion dies with the article rotating out....  I think there are people here that could collaborate on flushing out great ideas but it needs to happen in forums more prone to productive, ongoing conversation.

 

Obviously, lets start with the Fed Cartel!!

Wed, 10/08/2014 - 15:00 | 5304588 cougar_w
cougar_w's picture

ZH already has a live chat section.

Wed, 10/08/2014 - 16:55 | 5305356 The_Dude
The_Dude's picture

Link?  Seriously...mine is an old account so maybe something I am missing?  I see ZChat instructions but no forum or chat area...

Wed, 10/08/2014 - 14:24 | 5304387 Soul Glow
Soul Glow's picture

The dollar is dead.  Long live the dollar.

Wed, 10/08/2014 - 17:18 | 5304718 TruthInSunshine
TruthInSunshine's picture

Gotta' love how every country needs to weaken their currency simultaneously to improve their exports to try and mitigate against a clearly powerful global slowdown.

That'll work out well. No friction there!

Wed, 10/08/2014 - 14:25 | 5304391 jubber
jubber's picture

So concerned the fucking Dow is up 250 points from its lows, when will this shit end?

Wed, 10/08/2014 - 14:32 | 5304415 Dr. Engali
Dr. Engali's picture

When will it end? Someday when you are sleeping blissfully dreaming of an early retirement because your 401k statement has been up every month for five years in a row. Then one day you will wake up with your raging hard on thanks to taking the blue pill fucking your wife just before bed and you'll find out that the whole freaking system just vaporized. Finally the reality of the illusion the U.S has been living in will come crashing down around everybody.... I only hope there are enough therapists...... or maybe that's why every federal agency has access to several billion bullets. 

Wed, 10/08/2014 - 14:44 | 5304512 SilverIsKing
SilverIsKing's picture

He'd better stock up on blue pills.

Wed, 10/08/2014 - 14:25 | 5304392 Keltner Channel Surf
Keltner Channel Surf's picture

Backed by 10cc,

Yellen begins to sing:

I'm not a dove
So don't forget it
It's just a market phase I'm going through
And just because
I’ve propped you up
Don't get too long, don't think you've got it made
I'm not a dove, no no

It's because ...

I keep Keynes’ picture
Upon the wall
It hides a Kool-Aid stain that's lying there
But don’t you ask me to take it down
You sound like Fisher – boy, that guy’s a clown!
But I'm NOT a dove, no no, it's because ... 

Ooh, it won’t be long ‘til lift-off
You won’t wait a long time

I'm not a dove
Wed, 10/08/2014 - 14:26 | 5304402 Pool Shark
Pool Shark's picture

 

 

Well played sir!

[golf clap]

 

Wed, 10/08/2014 - 14:37 | 5304411 TomGa
TomGa's picture

Can't take away the punchbowl yet or else this drunken party's over and the headaches that must inevitably follow will begin

1930's redux. "Cheap money is not a panacea." - NY Times, April 1930.

 

 

Wed, 10/08/2014 - 15:06 | 5304629 madcows
madcows's picture

but debt reduction is... make the bankers pay for their bad loans, and we'd be in a better place.

Wed, 10/08/2014 - 14:30 | 5304417 youngman
youngman's picture

I told you they would move the goal posts...change the rules in the middle of the game.....they will never raise rates...

Wed, 10/08/2014 - 14:32 | 5304434 Bell's 2 hearted
Bell's 2 hearted's picture

The minutes showed more clearly than before that concerns about global growth and the disinflationary impact of a strong currency are giving officials additional pause about moving quickly on rates.

 

no kidding

 

and there is nothing FR can do about it as other countries in/entering recession will devalue in attempt to grow

Wed, 10/08/2014 - 14:34 | 5304448 NotApplicable
NotApplicable's picture

"...even as the economy improves."

Stopped reading right there.

Wed, 10/08/2014 - 14:42 | 5304483 thunderchief
thunderchief's picture

I would compare Fed manipulation in all markets to rolling ten ton granite boulders around a table with a center pivot point.

If the balls all role to fast to one side they all go smashing off the table.

Anything they do,if you notice leads to these extremes now.

Smash gold and silver...destroy the mining industry and transfer all gold to the east, creating massive supply demand imbalences.

Strengthen dollar during taper... Get other countries to self destruct like japan or kill any competition in Rigged FX. Emerging markets crash, mass currency wars and economic havoc.. Do more QE and risk the ball rolling off the other side into dollar hyperinflation...

I could go on and on, but the bottom line is these people are extremely destructive and unpredictable.

Wed, 10/08/2014 - 14:39 | 5304484 medium giraffe
medium giraffe's picture

October 8th: International State The Fucking Obvious day. 

Wed, 10/08/2014 - 14:40 | 5304486 orangegeek
orangegeek's picture

earnings season starts tonight - guidance should be interesting - NO MO POMO by the 28th  - how you gonna do it yellen???

Wed, 10/08/2014 - 15:15 | 5304702 ThroxxOfVron
ThroxxOfVron's picture

Cocks WILL be sucked under the table.

Not YOUR cock mind you.

As a matter of fact, you will probably be asked to duck under the table to do your patriot duty right around the time the 'votes' are done being 'counted' in the mid-term 'elections'.

Wed, 10/08/2014 - 15:21 | 5304765 orangegeek
orangegeek's picture

and I bet yellen wears a ski mask

Wed, 10/08/2014 - 14:58 | 5304571 Ariadne
Ariadne's picture

It was only 2007 when congress was squeamish and uncertain about the word trillion. What's next after 1 trillion? Zimbabwe comes after a trillion.

Wed, 10/08/2014 - 14:59 | 5304585 abatis
abatis's picture

For several years Marc Faber has been saying in his newletter the FED cannot stop what they are doing - zero interest for ever and beyond. I should of bought 10 years at 3 like he advised.

Wed, 10/08/2014 - 15:03 | 5304612 cougar_w
cougar_w's picture

The strong dollar did it's damage, now they can relax a little and let the dollar float. But in a month they'll be back.

Wed, 10/08/2014 - 15:07 | 5304638 khakuda
khakuda's picture

You have to love Dudley.  Only an economist could say that falling gasoline prices which help consumers is a bad thing.

Wed, 10/08/2014 - 15:08 | 5304652 ThroxxOfVron
ThroxxOfVron's picture

"The minutes showed more clearly than before that concerns about global growth and the disinflationary impact of a strong currency are giving officials additional pause about moving quickly on rates. "

1. I thought that The FED was the Central Bank of the United States and that given this The FED would be concerned first and foremost with the economic conditions of the Citizenry of the United States.

2. A strong US Dollar results in lower prices but it is not a contraction of th money/credit supply and is thus NOT disinflationary/DEflationary.

3. IF a strong US Dollar lowers prices for imported goods and services wouldn't production utilization and employment rise to meet demand/consuption in the United States as more services and goods per Dollar were purchased and consumed creating 'growth' and fueling production?

4. When exactly will it be a good time to encourage or allow the US Dollar to strengthen?

Wed, 10/08/2014 - 15:13 | 5304688 g'kar
g'kar's picture

If I read this correctly, they cheered the dollar down?

Wed, 10/08/2014 - 15:49 | 5304986 Fuku Ben
Fuku Ben's picture

Great even the dove cartoons are showing one eye

http://celebmafia.com/wp-content/uploads/2014/05/katy-perry-cosmopolitan...

Wed, 10/08/2014 - 15:55 | 5305021 optimator
optimator's picture

That's a real battle the FED has trying to keep inflation at 2% as prices keep drifting down.

Wed, 10/08/2014 - 16:05 | 5305073 rejected
rejected's picture

Man, We really do think of these banksters as gods.

Wed, 10/08/2014 - 16:19 | 5305170 whidbey-2
whidbey-2's picture

 new economy ..for a while. then confusion as the EUro, Russian Rouble and ISIL blow apart and Obama comes unglued at the disloyality of his staff.

Wed, 10/08/2014 - 16:27 | 5305219 yogibear
yogibear's picture

Hilsenrath is the NY Fed's, William Dudley, lap boy.

Wed, 10/08/2014 - 16:36 | 5305262 Its Only Rock N Roll
Its Only Rock N Roll's picture

the 15th of never

Wed, 10/08/2014 - 16:41 | 5305270 blindman
blindman's picture

they will right the ship when the old crew,
the women and children have all
been cast away at sea. till then, they will
feed on crab and lobster and spit-up in your
general direction. good day.
if they knew they could get away with this
robbing the money system at the source they
would have done it years ago. ....

Wed, 10/08/2014 - 17:10 | 5305418 Herdee
Herdee's picture

Looks like Peter Schiff was right with the fact that they're boxed-in and can't raise rates.He says if anything,they'll be printing more once again after taking a break when tapering ends.He goes onto say that when markets start to collapse because of the "drugs" being removed and housing rolls over again,the punchbowl from the Fed will be back.He also tells us that the federal government can't get their defict under control and Obama should have it run up to close to 20 trillion by the time he's out.If they raise rates,they don't have the tax revenue coming in to pay the extra interest on the debt and they'll kill autos and everything else with higher interest.He claims that if the market tanks,pension funds will be hit hard at a bad time.It sounds like they're copying Japan.

Wed, 10/08/2014 - 18:26 | 5305753 huggy_in_london
huggy_in_london's picture

Yep, its Japan all over (oh the irony...after the US and others lectured the japanese all those years ago....)

Thu, 10/09/2014 - 05:47 | 5307491 AdvancingTime
AdvancingTime's picture

I must agree. Before the "Bernanke has all the answers" era, many of us criticized Japan for failing to own its problems. Many people thought Japan should face up to the mess it had created and do the right thing. Broadly accepted was the concept that only by letting its zombie banks and industries fail could Japan clean out the system and move forward.

While they claim otherwise, in many ways Bernanke and the Fed have put America on a path that mirrors the same unsuccessful path taken by Japan. A path that avoids real reform and bails out the very people that caused many of our problems.  As we measure the results of the Bernanke policy it seems they may not be much different than those achieved by Japan over the last few decades.

Bernanke endorsed and encouraged Japan to step on the gas and print more money until they lower the value of the yen and force inflation to set them on a path forward. More on the path we are going down in the article below.

http://brucewilds.blogspot.com/2013/11/we-are-on-path-to-lost-decades.ht...

Wed, 10/08/2014 - 17:39 | 5305543 toros
toros's picture

That's it?  This is drivel...

http://www.federalreserve.gov/monetarypolicy/fomcminutes20140917.htm

 

TPTB are insane.

Wed, 10/08/2014 - 18:25 | 5305742 huggy_in_london
huggy_in_london's picture

Ooooh that nasty deflation in gas prices, damn, we have to stop that.

We sure as hell don't want to see coffee prices come down either. 

Wed, 10/08/2014 - 18:26 | 5305756 blindman
blindman's picture

they sit around and devise means of robbing
the treasury and public absolutely blind. the
extraordinary measures are just blatant thievery
until the fed's owner parasites can line up future
structural financial models that will sustain
their gorging lust for power and "money" over
every aspect of life on earth. it is their system
and it is non-negotiable. i see no way to stop
it so i plan on watching it self destruct from
its own merits and success, destroying people
and their minds in process.
just know they did it to themselves and
they were amply warned of the danger in
such hubris. (i know futility when i see it.)
.
I'LL FLY AWAY (Lyrics) by Alison Krauss
http://www.youtube.com/watch?v=bcP9Zsaqnck
.
Back in the High Life Again: Warren Zevon
https://www.youtube.com/watch?v=Mo3lxKrjABE
.
best to you and good luck with this crowd.

Thu, 10/09/2014 - 05:42 | 5307487 AdvancingTime
AdvancingTime's picture

Regardless of what you call it the "Federal Reserve Nightmare" or the "Yellen conundrum", the box Ben Bernanke made when he painted both himself and the Federal Reserve in a corner remains. Bernanke has by passing the chairmanship to Yellen escaped from the QE trap but left the rest of us fully in its grasp.

With a policy of loose and cheap money  and an inflation target of just 2% the Federal Reserve  continues to please those gambling that not fighting the Fed guarantees profits. I wish someone would let the Fed know we have already passed their inflation target.

As many Americans are forced to pay higher food, gasoline, and health insurance premiums any thought that inflation is not higher has come from the false illusion brought from lower payments on things like auto loans and mortgages. This is a one off and will not continue. Trouble lurks ahead. More on this subject in the article below.

 http://brucewilds.blogspot.com/2014/06/exit-strategy-from-qe-remains-elu...

Do NOT follow this link or you will be banned from the site!