Former Fed President: "Living In Constant Fear Of Market Reaction Is Not How You Manage Central Bank Policy"

In the past three months, former Dallas Fed president (before he was replaced with a former Goldman M&A banker) and current Barclays senior advisor, has not minced his words when it comes to his ongoing criticism of the Fed.

Back in January Fisher said (what even Liesman has now suggested) that "We Frontloaded A Tremendous Market Rally" and there is "No Ammo Left", followed by a second appearance earlier this month when he said that the Fed "Injected Cocaine And Heroin Into The System To Create A Wealth Effect."

This morning Fisher was again on CNBC to discuss Yellen's dovish speech at the Economic Club of NY, and said that the Fed is "living in a constant fear of a market reaction. This is not how the way you manage central bank policy."

Fisher also says that the asymmetry of risks, by which he means the ability to only cut so much when recession hits, is "a big deal and what that means is that Fed does not have a whole lot to give back", although he adds that "the nice thing is that there was no mention of negative interest rates, and nothing much left."

No mention of negative interest rates this time: compare that to late 2015 when there was quite a bit of mention of negative interest rates. There will be again.

At this point Liesman interjects about the clear discord at the Fed, pointing out that you had John Williams, Dennis Lockhart who all "move markets by giving speeches" which were clearly hawkish, adding that "if you don't have your people on board then you create tumult." Well, he is right: the Fed is now making it up as it goes along meeting by meeting.

Fisher ends by looking at the Fed's laughable dot plot (which had four rate hikes forecast in December since cut to two by March, even as both unemployment and inflation improved in the past three months), and says that according to Yellen we get "0.9% by the end of the year, and we are currently at 0.25%" and asks "how do we get there in election season where you really don't want to temper with things close to the election in October" and as a result the Fed will have to move, even once, some time before then, perhaps in June.

Unless it doesn't move at all, of course.

Finally, in what was perhaps the most interesting section in the interview, Fisher touched on the Democrat bias at the Fed (as we noted earlier this month when we showed Fed governor Lael Brainard donating money to Hillary Clinton) in the context of easing as we head into the elections, and wondered if this may be construed as an attempt to influence political outcomes through monetary policy. Unfortunately CNBC decided to cut that part out of the interview.

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