TextCEsInFinance/fomc-communication · Datasets at Hugging Face

index int64 0 1.98k	text stringlengths 13 1.05k	year int64 2k 2.02k	label int64 0 2	text_label stringclasses 3 values
1,857	In contrast, businesses cut production and employment substantially in recent months--likely reflecting, in part, inventory overhangs that persisted into the early part of the year--and fixed investment continued to contract.	2,018	0	dovish
1,858	Looking ahead, the projected slowing in the growth of final sales, including the effects of weak export markets, likely would reinforce business efforts to bring the growth of their inventories into better alignment with that of their sales, and such a development should contribute to the projected slowing in overall economic activity in coming quarters.	2,004	0	dovish
1,859	Although the near-term economic outlook is weak, the Committee anticipates that policy actions to stabilize financial markets and institutions, together with fiscal and monetary stimulus, will contribute to a gradual resumption of sustainable economic growth.	2,018	0	dovish
1,860	As a consequence of these higher real interest rates, the ratio of net worth to income for the average household is already lower than it was earlier this year.	2,017	1	hawkish
1,861	At the same time, the staff viewed the risks around its outlook for the unemployment rate as roughly balanced.	2,018	2	neutral
1,862	In furtherance of these objectives, the Committee reaffirmed at its meeting in June the ranges it had established in February for growth of M2 and M3 of 1 to 5 percent and 2 to 6 percent respectively, measured from the fourth quarter of 1998 to the fourth quarter of 1999.	2,017	2	neutral
1,863	Just as in the earlier analysis of Ammer and Freeman, this analysis suggested that in all three countries the inflation targeting led to a drop in inflation and nominal interest rates.	2,004	0	dovish
1,864	Nonetheless, with fiscal policy assumed to be tighter next year than this year, the staff anticipated that real GDP growth would not materially exceed increases in potential output in 2013.	1,996	2	neutral
1,865	Although some members noted that a case could be made that the risks to inflation were now somewhat skewed to the upside and those to sustainable economic growth perhaps to the downside, the most likely outcome remained one of stable prices and sustainable growth, and the Committee agreed that it should retain a balanced assessment of risks conditional on appropriate policy.	2,015	2	neutral
1,866	If we—if we analyze inflation data and conclude that, clearly, transitory influences are holding down inflation, I do not want to say that we would respond to that.	2,021	2	neutral
1,867	A main reason I expect this outcome is simply the fact that the very low inflation readings during last spring's deep economic contraction will drop from the usual calculation of 12-month price changes.	1,998	0	dovish
1,868	For example, Ang, Piazzesi, and Wei (2003) have used modern financial theory to construct a model of the Treasury yield curve that closely links the behavior of real GDP and a few key interest rates.	2,004	2	neutral
1,869	Financial conditions continue to pose a downside risk to the outlook for growth.	2,006	0	dovish
1,870	With the economy at full employment and inflation far above target, we should signal that we are moving back to neutral at a fast pace based on the performance of the economy, and a 50-basis point hike would help do that.	2,022	1	hawkish
1,871	I don’t really think asset prices themselves represent a significant threat to financial stability, and that’s because households are in good shape financially than they have been.	2,013	0	dovish
1,872	Although the aggregate balance sheet for the household sector was strong and the unemployment rate was low, consumer sentiment had deteriorated, and households were reportedly becoming more cautious in their expenditure decisions in light of uncertainty about the economic outlook and the reduction in purchasing power induced by price rises, particularly increases in the prices of essentials such as food, housing, and transportation.	2,015	1	hawkish
1,873	So that’s in the low 20s, and that’s post the May employment report.	2,013	2	neutral
1,874	Accordingly, considerable caution needed to be exercised in assessing the outlook for productivity and in relying on projections of the economy and prices, which necessarily embodied judgments about this outlook, in making monetary policy.	2,022	2	neutral
1,875	Participants continued to expect that, as the effects of transitory factors waned and labor market conditions strengthened further, inflation would stabilize around the Committee's 2 percent objective over the medium term.	1,998	2	neutral
1,876	With energy price increases expected to slow next year, total PCE inflation was seen as likely to fall back in line with core inflation by the end of 2011, as in previous projections.	2,020	2	neutral
1,877	Moreover, not all measures of core inflation had accelerated	2,011	2	neutral
1,878	Crude oil prices, though volatile, had not risen appreciably in recent months on balance, and a flattening in energy prices was beginning to damp headline inflation.	2,016	2	neutral
1,879	How would that development affect the economy and monetary policy?	2,007	2	neutral
1,880	Price and capital controls, which might have been feasible a half century ago, would be very difficult to implement in today's more technologically advanced environment.	2,002	2	neutral
1,881	It is now generally recognized that price stability is a prerequisite for the efficient allocation of resources in our economy and, indeed, for fulfilling our ultimate mandate to promote maximum sustainable employment over time.	1,999	1	hawkish
1,882	On average, over the period from November 2020 to January 2021, the fraction of prime-age women with children aged 6 to 17 who were out of the labor force for caregiving had increased by 2.4 percentage points from a year earlier, while for men the fraction had increased by about 0.6 percentage point.5 If not soon reversed, the decline in the participation rate for primeâ€‘age women could have scarring effects, with longer-term implications for household incomes and potential growth.6 Roughly 90 percent of the shortfall in private payroll employment relative to the pre-COVID level is concentrated in service-providing industries, with half of these service job losses in leisure and hospitality.	2,017	0	dovish
1,883	In terms of missing on inflation, policymakers' projections looked very much like most of the public's.	2,021	2	neutral
1,884	I mean, we—the—again, the relationship between slack in the economy and inflation is weak, has been weak.	2,015	2	neutral
1,885	The bottom line is that past performance, in several important dimensions, has been extraordinary and that prospects look favorable for continued expansion and relatively low inflation.	2,021	0	dovish
1,886	Staff Economic Outlook In the economic forecast prepared for the January FOMC meeting, the staff's projection for the growth in real gross domestic product (GDP) in the near term was revised down a bit.	2,012	0	dovish
1,887	The vote encompassed approval of the paragraph below for inclusion in the press statement to be released shortly after the meeting: "The Committee perceives the upside and downside risks to the attainment of both sustainable growth and price stability for the next few quarters are roughly equal.	2,012	2	neutral
1,888	My general point is that inflation is much too high, and the outlook for inflation remains significantly uncertain.	2,021	1	hawkish
1,889	Participants generally agreed that the drag on U. S. economic activity from the appreciation of the dollar since the summer of 2014 and the slowdown in foreign economic growth, particularly in emerging market economies, was likely to continue to depress U. S. net exports for some time.	2,008	0	dovish
1,890	With the economic outlook held constant, changes in the net demand for long-term securities have their largest effect on the term premium.	2,022	2	neutral
1,891	An upside risk was that inflation could increase more than expected in an economy that was projected to move further above its potential.	2,002	1	hawkish
1,892	The net effect could be steady, rising, or falling inflation--depending on whether productivity continues to accelerate and on how low the unemployment rate is driven in the process.	2,005	2	neutral
1,893	Moreover, the expected strength in aggregate demand would curb the extent of disinflation over time.	2,002	2	neutral
1,894	Critical though this issue is, it does not by itself capture the importance of productivity.	2,020	2	neutral
1,895	Because they cannot rule out the chance that some asset prices might correct more than anticipated, policymakers must consider how the economy might withstand such a correction.	2,007	2	neutral
1,896	Although the rate of pass-through from the higher prices of energy and other commodities to core consumer price inflation appears to have remained relatively low, the cumulative increases in energy and commodity prices have been large enough that they could account for some of the recent pickup in core inflation.	2,004	1	hawkish
1,897	The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run. "	2,013	0	dovish
1,899	About the same time, Board staff developed the so-called P* (P-star) model, based on M2, which used the quantity theory of money and estimates of long-run potential output and velocity (the ratio of nominal income to money) to predict long-run inflation trends.	2,004	2	neutral
1,900	What about the effects of a productivity shock on inflation?	2,022	2	neutral
1,901	The real federal funds rate probably was not greatly out of line with its appropriate level, and the rise in longer-term interest rates and the exchange rate meant that financial conditions were now exerting more restraint than earlier this year.	2,011	1	hawkish
1,902	In this environment, America's prospects for economic growth will greatly depend on our capacity to develop and to apply new technology--a quest that inevitably will entail some risk-taking.	2,019	2	neutral
1,903	Inflation compensation for 2007 declined modestly, perhaps reflecting the further drop in spot energy prices, but was largely unchanged at longer maturities.	2,004	2	neutral
1,904	The large current account deficit was seen as a factor pointing to potential depreciation of the dollar over time, with adverse repercussions on domestic inflation albeit favorable effects on exports.	2,010	1	hawkish
1,905	Productivity and TechnologyLet me now turn from the overall economic outlook to productivity and technology developments.	2,005	2	neutral
1,906	The logic goes as follows: Easier monetary policy, for example, raises stock prices.	2,005	2	neutral
1,907	In particular, we may need additional public communications about the conditions that constitute substantial further progress since December toward our broad and inclusive definition of maximum employment.	2,005	0	dovish
1,908	Participants noted that the improved performance of investment suggested that the expansion was becoming more balanced, with strengthening business spending potentially offsetting some moderation in the growth of household spending from the elevated rates of recent years.	2,011	2	neutral
1,909	Labor force participation isn't growing as much as one would expect with the hot job market, but apparently it's growing enough to keep the job creation machine humming.	1,998	2	neutral
1,910	Nonetheless, employment is still 9.5 million below its pre-pandemic level for the economy as a whole.	1,999	0	dovish
1,911	Most participants continued to see the risks to inflation as balanced.	2,007	2	neutral
1,912	The Federal Reserve has a dual mandate from the Congress to pursue policies that aim to achieve and sustain maximum employment and price stability.	2,007	1	hawkish
1,913	Monetary policy has an ambiguous effect on trade imbalances.	1,997	2	neutral
1,914	and that given the downside risks to economic growth, an early exit could unnecessarily damp the ongoing economic recovery.	2,008	0	dovish
1,915	However, this shortfall partly reflected the earlier declines in energy prices and decreasing prices of non-energy imports, and some participants pointed out that, by some measures, the most recent monthly inflation readings had firmed a bit.	1,998	0	dovish
1,916	that longer-term inflation expectations were likely to remain anchored, partly because modest changes in labor costs would constrain inflation trends	2,008	2	neutral
1,917	To be sure, the prices of assets and the level of debt seem to reflect expectations of a benign economic environment--one in which policy will tighten only gradually, the economy will continue to strengthen and inflation will remain low, and the demand for houses and equities will remain solid.	2,021	0	dovish
1,918	Reserve market conditions associated with this directive had been expected to be consistent with some moderation in the growth of M2 and M3 over coming months.	2,012	2	neutral
1,919	Of course, the basic problem in tackling the inflation of the 1970s is that we have one observation and many competing theories.	2,002	1	hawkish
1,920	Inflation continued to climb in June, reaching 9.1 percent as measured by the consumer price index.	2,005	1	hawkish
1,921	It is an honor to be here with Ben Bernanke and Janet Yellen, who pioneered the original Statement on Longer-Run Goals and Monetary Policy Strategy in 2012.	2,020	2	neutral
1,922	Any such rise in inflation expectations and associated upward pressure on inflation itself would likely prove costly to reverse.	2,015	1	hawkish
1,923	A soft labor market will keep a lid on the growth in the cost of employing workers.	2,005	2	neutral
1,924	The dominant force of late appears to have been a significant increase in the structural rate of productivity growth.	2,004	0	dovish
1,925	After deteriorating further early in the period, foreign equity prices bounced back and credit spreads on emerging market bonds narrowed, in both cases returning to December levels in most countries.	2,015	2	neutral
1,926	Accordingly, in the context of the Committee's long-run objectives for price stability and sustainable economic growth, and giving careful consideration to economic, financial, and monetary developments, the Committee decided that a slightly higher or a slightly lower federal funds rate might be acceptable during the intermeeting period.	2,022	2	neutral
1,927	also how far it will fall and if it will fall soon enough to avoid spurring a concerning rise in longer-term inflation expectations.	1,998	1	hawkish
1,928	overall consumer prices had been pushed up recently by sharp rises in energy prices.	2,000	1	hawkish
1,929	But also we want to see inflation move up back to our 2 percent objective over the medium term, and so seeing above-trend growth and continuing tightness—greater tightness in labor and product markets—I think that will help us achieve our objective as well with respect to inflation.	2,018	0	dovish
1,930	As a result, growth of spending on consumer durables and houses was expected to slow	2,015	1	hawkish
1,931	Productivity accelerated.	2,005	0	dovish
1,932	Eventually, financial markets may develop the instruments and associated analytical techniques for unearthing these implicit changes in the price level with some precision.	1,996	2	neutral
1,934	Investor perceptions of a somewhat less accommodative tone of Federal Reserve communications, as well as the softer-than-expected reading for the April CPI, likely contributed to the decline in inflation compensation.	2,020	0	dovish
1,935	While moderating the pace of purchases and the eventual increase in the federal funds rate may well affect capital flows, interest rates and asset prices in EMEs, the overall macroeconomic effects need not be disruptive.	2,019	1	hawkish
1,936	The economy is continuing to make progress toward the FOMC’s objective of maximum sustainable employment.	2,012	1	hawkish
1,937	Longer-term inflation expectations have moved much less than actual inflation or near-term expectations, suggesting that households, businesses, and market participants also believe that current high inflation readings are likely to prove transitory and that, in any case, the Fed will keep inflation close to our 2 percent objective over time.12 5.	2,005	1	hawkish
1,938	Participants observed that both overall inflation and inflation for items other than food and energy remained near 2 percent on a 12-month basis.	1,997	2	neutral
1,939	Progress at Home and Abroad Over the past several quarters, we have seen improvement in inflation and activity both at home and abroad following a period when the drag on domestic activity from abroad was considerable.	2,001	2	neutral
1,940	Committee Policy Action In their discussion of monetary policy for this meeting, members agreed that the coronavirus outbreak was causing tremendous human and economic hardship across the United States and around the world.	2,007	0	dovish
1,941	We, frankly, didn’t even get inflation back up to target—without seeing wages getting out of touch with—with where they should be, so that’s the—that’s the biggest thing we can do.	2,020	0	dovish
1,942	Broad U. S. stock price indexes declined, on net, over the intermeeting period, apparently in response to the downbeat economic data.	2,011	0	dovish
1,943	For asset purchases, the Committee declared that tapering would wait "until substantial further progress has been made toward the Committee's maximum employment and price stability goals.	2,000	0	dovish
1,944	On balance, core consumer price inflation was projected to remain subdued and quite possibly edge lower.	2,005	0	dovish
1,945	Global growth estimates continue to be marked down, and global disinflationary pressures cloud the outlook for U.S. inflation.	1,998	0	dovish
1,946	The weakness in labor market conditions remained an important concern to meeting participants, with unemployment expected to remain elevated for some time.	2,001	0	dovish
1,947	Nearly all measures of total and core prices had decelerated over the past year, and in the context of forecasts implying a continued sizable gap between actual and potential output, the risk that inflationary pressures would intensify significantly over coming quarters appeared to be quite limited	2,006	0	dovish
1,948	A European Central Bank analysis concluded that the release of capital buffers increased headroom for banks relative to not only their regulatory thresholds, but also their internal risk controls, and enabled banks to continue providing credit to households and businesses.6 And of course, monetary policy is focused on restoring price stability in a high-inflation environment.	1,999	1	hawkish
1,949	The implications of the spread of e-money for monetary policy would arise from the substitution of e-money for both currency and deposits, shrinking the size of the monetary base.	2,004	0	dovish
1,950	In particular, investors noted that the Committee attributed some of the recent increase in inflation to transitory factors, retained its earlier balance of risks assessment, and reiterated its belief that policy accommodation could be removed at a pace that would likely be measured.	2,003	1	hawkish
1,951	What they have had is low unemployment, lots of social problems.	2,017	2	neutral
1,952	Financial conditions affecting emerging market economies continued to improve for a time after the Committee eased monetary policy at its November 17 meeting, but that trend was subsequently reversed after Brazil's legislature decided to reject a key fiscal reform measure.	2,014	0	dovish
1,953	However, participants generally saw these downward pressures on inflation starting to abate next year, with widespread distribution of vaccines reducing social-distancing concerns and spurring economic activity.	2,000	1	hawkish
1,954	In discussing the effect of labor market conditions on inflation, a number of participants expressed skepticism about recent studies suggesting that long-term unemployment provides less downward pressure on wage and price inflation than short-term unemployment does.	2,001	2	neutral
1,955	The prices of their exports are lower than they would be if market forces were given greater scope in foreign exchange markets, and they are supplying more goods and services to the rest of the world than they themselves are demanding.	2,022	0	dovish
1,956	Foreign economic growth declined in the second quarter.	2,016	2	neutral
1,957	If you lay the crosscurrents on top of that—concerns about global growth and trade developments—you have the full picture.	2,021	2	neutral
1,958	Consistent with the view that recent lower inflation readings could be temporary, a number of participants mentioned the trimmed mean measure of PCE price inflation, produced by the Federal Reserve Bank of Dallas, which removes the influence of unusually large changes in the prices of individual items in either direction; these participants observed that the trimmed mean measure had been stable at or close to 2 percent over recent months.	1,996	2	neutral

1,857

In contrast, businesses cut production and employment substantially in recent months--likely reflecting, in part, inventory overhangs that persisted into the early part of the year--and fixed investment continued to contract.

2,018

0

dovish

1,858

Looking ahead, the projected slowing in the growth of final sales, including the effects of weak export markets, likely would reinforce business efforts to bring the growth of their inventories into better alignment with that of their sales, and such a development should contribute to the projected slowing in overall economic activity in coming quarters.

2,004

0

dovish

1,859

Although the near-term economic outlook is weak, the Committee anticipates that policy actions to stabilize financial markets and institutions, together with fiscal and monetary stimulus, will contribute to a gradual resumption of sustainable economic growth.

2,018

0

dovish

1,860

As a consequence of these higher real interest rates, the ratio of net worth to income for the average household is already lower than it was earlier this year.

2,017

1

hawkish

1,861

At the same time, the staff viewed the risks around its outlook for the unemployment rate as roughly balanced.

2,018

2

neutral

1,862

In furtherance of these objectives, the Committee reaffirmed at its meeting in June the ranges it had established in February for growth of M2 and M3 of 1 to 5 percent and 2 to 6 percent respectively, measured from the fourth quarter of 1998 to the fourth quarter of 1999.

2,017

2

neutral

1,863

Just as in the earlier analysis of Ammer and Freeman, this analysis suggested that in all three countries the inflation targeting led to a drop in inflation and nominal interest rates.

2,004

0

dovish

1,864

Nonetheless, with fiscal policy assumed to be tighter next year than this year, the staff anticipated that real GDP growth would not materially exceed increases in potential output in 2013.

1,996

2

neutral

1,865

Although some members noted that a case could be made that the risks to inflation were now somewhat skewed to the upside and those to sustainable economic growth perhaps to the downside, the most likely outcome remained one of stable prices and sustainable growth, and the Committee agreed that it should retain a balanced assessment of risks conditional on appropriate policy.

2,015

2

neutral

1,866

If we—if we analyze inflation data and conclude that, clearly, transitory influences are holding down inflation, I do not want to say that we would respond to that.

2,021

2

neutral

1,867

A main reason I expect this outcome is simply the fact that the very low inflation readings during last spring's deep economic contraction will drop from the usual calculation of 12-month price changes.

1,998

0

dovish

1,868

For example, Ang, Piazzesi, and Wei (2003) have used modern financial theory to construct a model of the Treasury yield curve that closely links the behavior of real GDP and a few key interest rates.

2,004

2

neutral

1,869

Financial conditions continue to pose a downside risk to the outlook for growth.

2,006

0

dovish

1,870

With the economy at full employment and inflation far above target, we should signal that we are moving back to neutral at a fast pace based on the performance of the economy, and a 50-basis point hike would help do that.

2,022

1

hawkish

1,871

I don’t really think asset prices themselves represent a significant threat to financial stability, and that’s because households are in good shape financially than they have been.

2,013

0

dovish

1,872

Although the aggregate balance sheet for the household sector was strong and the unemployment rate was low, consumer sentiment had deteriorated, and households were reportedly becoming more cautious in their expenditure decisions in light of uncertainty about the economic outlook and the reduction in purchasing power induced by price rises, particularly increases in the prices of essentials such as food, housing, and transportation.

2,015

1

hawkish

1,873

So that’s in the low 20s, and that’s post the May employment report.

2,013

2

neutral

1,874

Accordingly, considerable caution needed to be exercised in assessing the outlook for productivity and in relying on projections of the economy and prices, which necessarily embodied judgments about this outlook, in making monetary policy.

2,022

2

neutral

1,875

Participants continued to expect that, as the effects of transitory factors waned and labor market conditions strengthened further, inflation would stabilize around the Committee's 2 percent objective over the medium term.

1,998

2

neutral

1,876

With energy price increases expected to slow next year, total PCE inflation was seen as likely to fall back in line with core inflation by the end of 2011, as in previous projections.

2,020

2

neutral

1,877

Moreover, not all measures of core inflation had accelerated

2,011

2

neutral

1,878

Crude oil prices, though volatile, had not risen appreciably in recent months on balance, and a flattening in energy prices was beginning to damp headline inflation.

2,016

2

neutral

1,879

How would that development affect the economy and monetary policy?

2,007

2

neutral

1,880

Price and capital controls, which might have been feasible a half century ago, would be very difficult to implement in today's more technologically advanced environment.

2,002

2

neutral

1,881

It is now generally recognized that price stability is a prerequisite for the efficient allocation of resources in our economy and, indeed, for fulfilling our ultimate mandate to promote maximum sustainable employment over time.

1,999

1

hawkish

1,882

On average, over the period from November 2020 to January 2021, the fraction of prime-age women with children aged 6 to 17 who were out of the labor force for caregiving had increased by 2.4 percentage points from a year earlier, while for men the fraction had increased by about 0.6 percentage point.5 If not soon reversed, the decline in the participation rate for primeâ€‘age women could have scarring effects, with longer-term implications for household incomes and potential growth.6 Roughly 90 percent of the shortfall in private payroll employment relative to the pre-COVID level is concentrated in service-providing industries, with half of these service job losses in leisure and hospitality.

2,017

0

dovish

1,883

In terms of missing on inflation, policymakers' projections looked very much like most of the public's.

2,021

2

neutral

1,884

I mean, we—the—again, the relationship between slack in the economy and inflation is weak, has been weak.

2,015

2

neutral

1,885

The bottom line is that past performance, in several important dimensions, has been extraordinary and that prospects look favorable for continued expansion and relatively low inflation.

2,021

0

dovish

1,886

Staff Economic Outlook In the economic forecast prepared for the January FOMC meeting, the staff's projection for the growth in real gross domestic product (GDP) in the near term was revised down a bit.

2,012

0

dovish

1,887

The vote encompassed approval of the paragraph below for inclusion in the press statement to be released shortly after the meeting: "The Committee perceives the upside and downside risks to the attainment of both sustainable growth and price stability for the next few quarters are roughly equal.

2,012

2

neutral

1,888

My general point is that inflation is much too high, and the outlook for inflation remains significantly uncertain.

2,021

1

hawkish

1,889

Participants generally agreed that the drag on U. S. economic activity from the appreciation of the dollar since the summer of 2014 and the slowdown in foreign economic growth, particularly in emerging market economies, was likely to continue to depress U. S. net exports for some time.

2,008

0

dovish

1,890

With the economic outlook held constant, changes in the net demand for long-term securities have their largest effect on the term premium.

2,022

2

neutral

1,891

An upside risk was that inflation could increase more than expected in an economy that was projected to move further above its potential.

2,002

1

hawkish

1,892

The net effect could be steady, rising, or falling inflation--depending on whether productivity continues to accelerate and on how low the unemployment rate is driven in the process.

2,005

2

neutral

1,893

Moreover, the expected strength in aggregate demand would curb the extent of disinflation over time.

2,002

2

neutral

1,894

Critical though this issue is, it does not by itself capture the importance of productivity.

2,020

2

neutral

1,895

Because they cannot rule out the chance that some asset prices might correct more than anticipated, policymakers must consider how the economy might withstand such a correction.

2,007

2

neutral

1,896

Although the rate of pass-through from the higher prices of energy and other commodities to core consumer price inflation appears to have remained relatively low, the cumulative increases in energy and commodity prices have been large enough that they could account for some of the recent pickup in core inflation.

2,004

1

hawkish

1,897

The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run. "

2,013

0

dovish

1,899

About the same time, Board staff developed the so-called P* (P-star) model, based on M2, which used the quantity theory of money and estimates of long-run potential output and velocity (the ratio of nominal income to money) to predict long-run inflation trends.

2,004

2

neutral

1,900

What about the effects of a productivity shock on inflation?

2,022

2

neutral

1,901

The real federal funds rate probably was not greatly out of line with its appropriate level, and the rise in longer-term interest rates and the exchange rate meant that financial conditions were now exerting more restraint than earlier this year.

2,011

1

hawkish

1,902

In this environment, America's prospects for economic growth will greatly depend on our capacity to develop and to apply new technology--a quest that inevitably will entail some risk-taking.

2,019

2

neutral

1,903

Inflation compensation for 2007 declined modestly, perhaps reflecting the further drop in spot energy prices, but was largely unchanged at longer maturities.

2,004

2

neutral

1,904

The large current account deficit was seen as a factor pointing to potential depreciation of the dollar over time, with adverse repercussions on domestic inflation albeit favorable effects on exports.

2,010

1

hawkish

1,905

Productivity and TechnologyLet me now turn from the overall economic outlook to productivity and technology developments.

2,005

2

neutral

1,906

The logic goes as follows: Easier monetary policy, for example, raises stock prices.

2,005

2

neutral

1,907

In particular, we may need additional public communications about the conditions that constitute substantial further progress since December toward our broad and inclusive definition of maximum employment.

2,005

0

dovish

1,908

Participants noted that the improved performance of investment suggested that the expansion was becoming more balanced, with strengthening business spending potentially offsetting some moderation in the growth of household spending from the elevated rates of recent years.

2,011

2

neutral

1,909

Labor force participation isn't growing as much as one would expect with the hot job market, but apparently it's growing enough to keep the job creation machine humming.

1,998

2

neutral

1,910

Nonetheless, employment is still 9.5 million below its pre-pandemic level for the economy as a whole.

1,999

0

dovish

1,911

Most participants continued to see the risks to inflation as balanced.

2,007

2

neutral

1,912

The Federal Reserve has a dual mandate from the Congress to pursue policies that aim to achieve and sustain maximum employment and price stability.

2,007

1

hawkish

1,913

Monetary policy has an ambiguous effect on trade imbalances.

1,997

2

neutral

1,914

and that given the downside risks to economic growth, an early exit could unnecessarily damp the ongoing economic recovery.

2,008

0

dovish

1,915

However, this shortfall partly reflected the earlier declines in energy prices and decreasing prices of non-energy imports, and some participants pointed out that, by some measures, the most recent monthly inflation readings had firmed a bit.

1,998

0

dovish

1,916

that longer-term inflation expectations were likely to remain anchored, partly because modest changes in labor costs would constrain inflation trends

2,008

2

neutral

1,917

To be sure, the prices of assets and the level of debt seem to reflect expectations of a benign economic environment--one in which policy will tighten only gradually, the economy will continue to strengthen and inflation will remain low, and the demand for houses and equities will remain solid.

2,021

0

dovish

1,918

Reserve market conditions associated with this directive had been expected to be consistent with some moderation in the growth of M2 and M3 over coming months.

2,012

2

neutral

1,919

Of course, the basic problem in tackling the inflation of the 1970s is that we have one observation and many competing theories.

2,002

1

hawkish

1,920

Inflation continued to climb in June, reaching 9.1 percent as measured by the consumer price index.

2,005

1

hawkish

1,921

It is an honor to be here with Ben Bernanke and Janet Yellen, who pioneered the original Statement on Longer-Run Goals and Monetary Policy Strategy in 2012.

2,020

2

neutral

1,922

Any such rise in inflation expectations and associated upward pressure on inflation itself would likely prove costly to reverse.

2,015

1

hawkish

1,923

A soft labor market will keep a lid on the growth in the cost of employing workers.

2,005

2

neutral

1,924

The dominant force of late appears to have been a significant increase in the structural rate of productivity growth.

2,004

0

dovish

1,925

After deteriorating further early in the period, foreign equity prices bounced back and credit spreads on emerging market bonds narrowed, in both cases returning to December levels in most countries.

2,015

2

neutral

1,926

Accordingly, in the context of the Committee's long-run objectives for price stability and sustainable economic growth, and giving careful consideration to economic, financial, and monetary developments, the Committee decided that a slightly higher or a slightly lower federal funds rate might be acceptable during the intermeeting period.

2,022

2

neutral

1,927

also how far it will fall and if it will fall soon enough to avoid spurring a concerning rise in longer-term inflation expectations.

1,998

1

hawkish

1,928

overall consumer prices had been pushed up recently by sharp rises in energy prices.

2,000

1

hawkish

1,929

But also we want to see inflation move up back to our 2 percent objective over the medium term, and so seeing above-trend growth and continuing tightness—greater tightness in labor and product markets—I think that will help us achieve our objective as well with respect to inflation.

2,018

0

dovish

1,930

As a result, growth of spending on consumer durables and houses was expected to slow

2,015

1

hawkish

1,931

Productivity accelerated.

2,005

0

dovish

1,932

Eventually, financial markets may develop the instruments and associated analytical techniques for unearthing these implicit changes in the price level with some precision.

1,996

2

neutral

1,934

Investor perceptions of a somewhat less accommodative tone of Federal Reserve communications, as well as the softer-than-expected reading for the April CPI, likely contributed to the decline in inflation compensation.

2,020

0

dovish

1,935

While moderating the pace of purchases and the eventual increase in the federal funds rate may well affect capital flows, interest rates and asset prices in EMEs, the overall macroeconomic effects need not be disruptive.

2,019

1

hawkish

1,936

The economy is continuing to make progress toward the FOMC’s objective of maximum sustainable employment.

2,012

1

hawkish

1,937

Longer-term inflation expectations have moved much less than actual inflation or near-term expectations, suggesting that households, businesses, and market participants also believe that current high inflation readings are likely to prove transitory and that, in any case, the Fed will keep inflation close to our 2 percent objective over time.12 5.

2,005

1

hawkish

1,938

Participants observed that both overall inflation and inflation for items other than food and energy remained near 2 percent on a 12-month basis.

1,997

2

neutral

1,939

Progress at Home and Abroad Over the past several quarters, we have seen improvement in inflation and activity both at home and abroad following a period when the drag on domestic activity from abroad was considerable.

2,001

2

neutral

1,940

Committee Policy Action In their discussion of monetary policy for this meeting, members agreed that the coronavirus outbreak was causing tremendous human and economic hardship across the United States and around the world.

2,007

0

dovish

1,941

We, frankly, didn’t even get inflation back up to target—without seeing wages getting out of touch with—with where they should be, so that’s the—that’s the biggest thing we can do.

2,020

0

dovish

1,942

Broad U. S. stock price indexes declined, on net, over the intermeeting period, apparently in response to the downbeat economic data.

2,011

0

dovish

1,943

For asset purchases, the Committee declared that tapering would wait "until substantial further progress has been made toward the Committee's maximum employment and price stability goals.

2,000

0

dovish

1,944

On balance, core consumer price inflation was projected to remain subdued and quite possibly edge lower.

2,005

0

dovish

1,945

Global growth estimates continue to be marked down, and global disinflationary pressures cloud the outlook for U.S. inflation.

1,998

0

dovish

1,946

The weakness in labor market conditions remained an important concern to meeting participants, with unemployment expected to remain elevated for some time.

2,001

0

dovish

1,947

Nearly all measures of total and core prices had decelerated over the past year, and in the context of forecasts implying a continued sizable gap between actual and potential output, the risk that inflationary pressures would intensify significantly over coming quarters appeared to be quite limited

2,006

0

dovish

1,948

A European Central Bank analysis concluded that the release of capital buffers increased headroom for banks relative to not only their regulatory thresholds, but also their internal risk controls, and enabled banks to continue providing credit to households and businesses.6 And of course, monetary policy is focused on restoring price stability in a high-inflation environment.

1,999

1

hawkish

1,949

The implications of the spread of e-money for monetary policy would arise from the substitution of e-money for both currency and deposits, shrinking the size of the monetary base.

2,004

0

dovish

1,950

In particular, investors noted that the Committee attributed some of the recent increase in inflation to transitory factors, retained its earlier balance of risks assessment, and reiterated its belief that policy accommodation could be removed at a pace that would likely be measured.

2,003

1

hawkish

1,951

What they have had is low unemployment, lots of social problems.

2,017

2

neutral

1,952

Financial conditions affecting emerging market economies continued to improve for a time after the Committee eased monetary policy at its November 17 meeting, but that trend was subsequently reversed after Brazil's legislature decided to reject a key fiscal reform measure.

2,014

0

dovish

1,953

However, participants generally saw these downward pressures on inflation starting to abate next year, with widespread distribution of vaccines reducing social-distancing concerns and spurring economic activity.

2,000

1

hawkish

1,954

In discussing the effect of labor market conditions on inflation, a number of participants expressed skepticism about recent studies suggesting that long-term unemployment provides less downward pressure on wage and price inflation than short-term unemployment does.

2,001

2

neutral

1,955

The prices of their exports are lower than they would be if market forces were given greater scope in foreign exchange markets, and they are supplying more goods and services to the rest of the world than they themselves are demanding.

2,022

0

dovish

1,956

Foreign economic growth declined in the second quarter.

2,016

2

neutral

1,957

If you lay the crosscurrents on top of that—concerns about global growth and trade developments—you have the full picture.

2,021

2

neutral

1,958

Consistent with the view that recent lower inflation readings could be temporary, a number of participants mentioned the trimmed mean measure of PCE price inflation, produced by the Federal Reserve Bank of Dallas, which removes the influence of unusually large changes in the prices of individual items in either direction; these participants observed that the trimmed mean measure had been stable at or close to 2 percent over recent months.

1,996

2

neutral