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Several mentioned that the revisions to the NIPA pointed to a modest downward adjustment in projected growth of actual and potential GDP, but thought that potential output growth was likely to be a bit higher than forecast by the staff. | 2,010 | 2 |
A discernable upcreep was apparent in survey measures of short- and, to a limited extent, long-term inflation expectations over recent months. | 2,019 | 1 |
Participants' forecasts for economic growth for 2012 and 2013 were largely unchanged from their January projections and continued to indicate expectations that the recovery will strengthen somewhat over time. | 1,999 | 2 |
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 |
Yet, with a few exceptions, the available data show that productivity growth in other advanced countries has not increased to the extent seen in the United States. | 1,999 | 0 |
In their discussion of the economic situation and outlook, meeting participants noted that the economic information received since the last meeting pointed to a somewhat more favorable outlook regarding both inflation and economic growth than they had earlier anticipated. | 2,020 | 2 |
Expansion of these two monetary aggregates was supported by further rapid expansion in the demand for currency and stronger inflows to retail money market funds at a time of weakness in U. S. bond and equity markets. | 2,004 | 1 |
Historically, recessions often occurred when the Fed tightened to control inflation. | 2,007 | 2 |
In light of the current shortfall of inflation from 2 percent, the Committee will carefully monitor actual and expected progress toward its inflation goal. | 2,004 | 2 |
October 12, 2021 U.S. Economic Outlook and Monetary Policy Vice Chair Richard H. Clarida At the 2021 Institute of International Finance Annual Membership Meeting: Sustainable Economic Growth and Financial Stability in a Diverging, Decarbonizing, Digitizing, Indebted World, Washington, D.C. (via webcast) Share It is my pleasure to meet virtually with you today at the 2021 Institute of International Finance Annual Membership Meeting.1 I regret that we are not meeting in person, but I look forward, as always, to a conversation with my good friend and one-time colleague Tim Adams. | 2,020 | 2 |
The bulk of the variation comes from what finance academics call "changes in discount rates," which is a fancy way of saying the non-fundamental stuff that we don't understand very well--and which can include changes in either investor sentiment or risk aversion, price movements due to forced selling by either levered investors or convexity hedgers, and a variety of other effects that fall under the broad heading of internal market dynamics. | 2,021 | 2 |
In this case headline inflation will rise well above its underlying trend as the price of energy rises but will soon fall well below its underlying trend as the price of energy falls back to its initial level. | 2,020 | 2 |
Residential construction activity remained at a high level, evidently supported in part by recent declines in mortgage interest rates. | 2,012 | 0 |
In the days immediately following the Brexit vote, asset prices were volatile, and some financial markets, particularly certain foreign exchange markets, experienced brief periods of strained liquidity. | 2,010 | 2 |
To provide some evidence for this assertion, as well as some reasons for it, I draw your attention to a speech that Chairman Greenspan made earlier this year, entitled "Risk and Uncertainty in Monetary Policy" (Greenspan, 2004). | 2,003 | 2 |
The European Central Bank (ECB) began operating on June 1, 1998, and assumed responsibility for monetary policy in the euro area on January 1, 1999. | 2,003 | 2 |
Regarding the ELB, the previous statement was silent on the global decline in neutral policy rates, the likelihood that the ELB will constrain monetary policy space in economic downturns, and the implications of this constraint for our ability to achieve our dual-mandate goals. | 2,004 | 0 |
Although we cannot ascertain the precise rates of resource utilization that the economy can sustain, we can have little doubt that, after three years of above-trend growth, slack has been substantially reduced. | 1,997 | 1 |
Spreads on risky private-sector debt reached very low levels, and damaging spillovers to the nonfinancial sector occurred in the form of unduly high real estate prices and excessive leverage by borrowers in the housing market. | 2,006 | 1 |
Another clear attempt at political interference emerged in February 1988 when an undersecretary of the Treasury sent a letter to Federal Reserve officials urging them to ease monetary policy. | 2,006 | 2 |
Inflation rose further in most foreign economies, reflecting a reversal of price declines seen in the spring of 2020, higher energy and commodity prices, and supply bottlenecks. | 2,016 | 1 |
Staff Economic Outlook The projection for U. S. economic activity prepared by the staff for the April–May FOMC meeting was revised up on net. | 2,001 | 1 |
On the other hand, if recent productivity gains were to be sustained, as some business contacts indicated they would be, potential output currently could be higher than standard measures suggested, and the high level of the unemployment rate could be a more accurate indication of slack in resource utilization than usual measures of the output gap. | 2,001 | 0 |
Housing starts and the demand for new homes had declined further, house prices in many parts of the country were falling faster than they had towards the end of 2007, and inventories of unsold homes remained quite elevated. | 1,996 | 0 |
With the risks to the forecast for economic activity tilted to the downside, the risks to the inflation projection were also viewed as having a downward skew. | 2,003 | 0 |
We might look to the historical experience with oil price shocks in the 1970s—not a happy story. | 2,021 | 2 |
Thus, avoiding a further substantial fall in inflation should be a priority of monetary policy. | 2,003 | 0 |
Shortly after 9 a.m. each morning, the Desk staff and staff members at the Board of Governors confer over the phone to discuss their respective estimates of the day's demand for balances as well as to consider factors that may affect supply. | 2,006 | 2 |
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 |
At the conclusion of the discussion, the Committee voted to authorize and direct the Federal Reserve Bank of New York, until it was instructed otherwise, to execute transactions in the System Account in accordance with the following domestic policy directive: "The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output. | 2,009 | 1 |
I think it would be naive to assume that circumstances would not arise in which the central bank faced short-term choices between inflation stability and economic or financial stability. | 2,001 | 2 |
Inflation was still expected to be somewhat higher this year than last year, largely reflecting an upturn in the prices for food and non-energy imports. | 2,020 | 1 |
Operationally, maintaining price stability requires abiding by the Taylor principle of raising nominal interest rates more than one for one in response to movements in inflation, especially those movements perceived as persistent. | 2,001 | 2 |
Fourth and finally, the statement codifies the key lesson from the Global Financial Crisis—that financial stability is necessary for the achievement of our statutory goals of maximum employment and price stability. | 2,008 | 2 |
To cite a recent study, Faust and Wright (2007) show that real-time staff forecasts of inflation reliably outperform statistical benchmarks at all horizons and that this advantage is not solely the result of the staff's expertise at estimating near-term inflation rates. | 2,021 | 2 |
In essence, monetary credibility helps the central bank do its job, by inducing private sector participants also to take actions that help achieve the central bank's low inflation objective. | 2,022 | 1 |
With the boost from these factors fading, real GDP growth was projected to step down noticeably in 2023 and to be roughly equal to potential output growth in 2023 and 2024. | 2,007 | 2 |
Monetary policy seeks to buffer the economy from unexpected adverse disruptions, or "shocks." | 1,997 | 2 |
While prices in equity markets had turned up from their recent lows, the cumulative losses in financial wealth incurred since early 2000 clearly were having an adverse impact on expenditures by households and the higher cost of equity capital was inhibiting business investment. | 2,004 | 0 |
However, other participants noted that the continued subdued trend in wages was evidence of an absence of upward pressure on inflation from the current level of resource utilization. | 2,006 | 0 |
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 |
Such forces can also cause short-term fluctuations in the economy that are, at least in part, beyond the control of monetary policy. | 2,004 | 2 |
The behavior of the monetary aggregates will continue to be evaluated in the light of progress toward price level stability, movements in their velocities, and developments in the economy and financial markets. | 2,009 | 2 |
A majority of FOMC participants indicated that they expect core inflation to remain below our 2 percent objective and employment to fall short of its maximum level at least through the end of 2022. | 2,004 | 0 |
The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information. | 2,021 | 1 |
In the course of the Committee's discussion of the outlook for inflation, members commented that there was no persuasive evidence in recent statistical measures that price inflation was currently picking up or that inflation expectations were rising, though the declines in both inflation and expectations experienced over the course of recent years no longer seemed to be occurring. | 1,996 | 2 |
Participants expected that productivity growth would pick up as firms slowed hiring to a pace more in line with output growth but acknowledged that the improvement might be limited, particularly if business investment spending were to remain soft. | 2,008 | 2 |
Also, the recent evidence could be interpreted as indicating that the surprisingly sharp decline in measured inflation in 2003 exaggerated the drop in the underlying rate of inflation. | 2,001 | 0 |
So in terms of financial markets and monetary policy, we—as we say in our statement every cycle, we do take financial conditions into consideration because financial—broader financial conditions do affect the broader economy, and they’re one of the many things that we take into account. | 2,016 | 2 |
However, nothing prevents a central bank from switching its focus from the price of reserves to the quantity or growth of reserves. | 2,004 | 2 |
Participants' Views on Current Conditions and the Economic Outlook In their discussion of the economic situation and the outlook, meeting participants saw the information received over the intermeeting period as suggesting that labor market conditions had improved further in late 2015 even as economic growth slowed. | 2,012 | 2 |
Nonetheless, the current account deficit continued to grow as a result of the surge in U.S. investment and productivity and the associated capital inflows seeking the higher U.S. rates of return. | 2,003 | 1 |
So far this year, payroll employment had expanded at a faster pace than last year and the unemployment rate had declined further, although it remained elevated. | 2,018 | 2 |
Some may see a monetary policy that actively addresses episodes of financial instability along the lines that I have just described as promoting excessive risk-taking and thus increasing the probability of future crises. | 2,017 | 1 |
There were more reports that rising wages and benefits and increasing costs of nonlabor inputs could no longer be fully offset by improvements in productivity, and more business firms appeared to be attempting or considering increases in their selling prices to maintain or improve their profit margins. | 2,020 | 1 |
In addition, the Committee reaffirmed its intention to keep the target federal funds rate at 0 to 1/4 percent and retained its forward guidance that it anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee's 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. | 2,015 | 0 |
” The vote encompassed approval of the paragraph below for inclusion in the 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 to be roughly equal. | 2,013 | 2 |
These inferences are supported by some empirical evidence.10 On the other hand, the increased liquidity of home equity may lead consumer spending to respond more than in past years to changes in the values of their homes; some evidence does suggest that the correlation of consumption and house prices is higher in countries, like the United States, that have more sophisticated mortgage markets (Calza, Monacelli, and Stracca, 2007). | 2,001 | 2 |
A few participants commented that both survey- and market-based measures of short-term inflation expectations were at historically high levels. | 1,996 | 1 |
Although the initial offerings of these securities were well received, investor demand at the most recent sales was not as strong, a development consistent with the declines in the prices of non-agency residential mortgage-backed securities over the intermeeting period. | 2,018 | 1 |
However, the available measures of expectations--whether from surveys or financial markets--have shown longer-term expectations increasing very little, if at all, throughout this period, providing some assurance about the inflation outlook. | 2,004 | 2 |
Williamson cited Hayek's 1945 paper, along with Adam Smith's The Wealth of Nations from the eighteenth century, as forming the core of a "venerated tradition in economics" of studying the notion of "spontaneous order" arising from a freely operating market system.9 How does Hayek's case for the price system fit in alongside the other work that Williamson mentioned? | 2,017 | 2 |
A number of business contacts indicated that they were passing on at least a portion of these higher costs to their customers or that they planned to try to do so later this year; however, contacts were uncertain about the extent to which they could raise prices, given current market conditions and the cautious attitudes toward spending still held by households and businesses. | 2,014 | 1 |
Members expected to maintain an accommodative stance of monetary policy until those outcomes were achieved. | 2,009 | 0 |
The staff viewed the extent of uncertainty around its March projections for real GDP growth, the unemployment rate, and inflation as similar to the average over the past 20 years. | 1,997 | 2 |
Moreover, when some measures of inflation were close to 1 percent in 2003, the Federal Open Market Committee's official statements specifically noted that any further substantial decline in inflation would be unwelcome, mainly because of the risk that a falling price level (which has not occurred since the Great Depression) could cause a significant disruption to economic activity and employment. | 2,021 | 0 |
A key difference between the two groups of countries is that the countries whose current accounts have moved toward deficit have generally experienced substantial housing appreciation and increases in household wealth, while Germany and Japan--whose economies have been growing slowly despite very low interest rates--have not. | 1,998 | 2 |
The drop in demand leads, in turn, to a decline in actual output relative to its potential, that is, the level of output that the economy can produce at the maximum sustainable level of employment. | 2,004 | 0 |
This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. | 2,004 | 2 |
Home prices continued to rise briskly. | 2,019 | 1 |
Indeed, a number of members saw merit in the staff forecast that some further disinflation was a likely prospect in such circumstances. | 2,008 | 0 |
Mishkin and Jonas (forthcoming) describe the experiences of the three transition economies with inflation targets. | 2,020 | 2 |
However, in this framework, the current period appears to be an outlier.4 That is, even after factoring in the current-cycle dynamics of strong profit growth and relatively modest investment, a good part of the rise in liquid assets remains unaccounted for--as much as one half of the total rise in cash-to-assets--according to Federal Reserve staff estimates. | 2,004 | 2 |
As reflected in their SEP projections, participants regarded the current stance of monetary policy as likely to remain appropriate for a time as long as incoming information about the economy remained broadly consistent with the economic outlook. | 2,013 | 2 |
In both of the examples I have just discussed, the medium-frequency evolution of market-based, survey-based, and model-based estimates of r* and expected inflation have, over time, tended to move broadly together. | 2,019 | 2 |
As a result, most market interest rates rose somewhat in the period after the November 16 meeting. | 2,013 | 1 |
Although participants considered it unlikely that the economy would reenter a recession, many expressed concern that output growth, and the associated progress in reducing the level of unemployment, could be slow for some time. | 2,005 | 0 |
These included a decline in the cost of business capital, a recent rise in orders and backlogs of nondefense capital goods, persisting gains in productivity that undoubtedly pointed to growing profit opportunities, progress in strengthening business balance sheets, and reduced capital overhangs. | 2,020 | 1 |
Weekly data for March, however, indicated that gasoline prices rose sharply. | 2,009 | 1 |
To some, the continued subdued trend in wages was evidence of an absence of upward pressure on inflation from current levels of labor utilization. | 1,998 | 0 |
In terms of the performance of inflation and unemployment, the experience of the past few years has not been unlike a mirror image of the 1970s. | 2,021 | 2 |
Pursuant to the Committee's instructions in March, the staff had activated its study of the possible employment of mortgage-backed securities guaranteed by the Government National Mortgage Association (Ginnie Maes) in outright System open market operations. | 2,005 | 2 |
Some also argue that resistance to nominal wage cuts will impart an upward bias to real wages as price stability approaches or outright deflation occurs, leaving the economy with a potentially higher level of unemployment in equilibrium. | 2,022 | 0 |
Credit conditions in the commercial real estate (CRE) sector continued to ease, and growth in CRE loans at banks stayed solid. | 2,016 | 1 |
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. | 1,996 | 0 |
A couple of participants thought it premature to focus on this latter eventuality, observing that the purchase program had been effective and that more time was needed to assess the outlook for the labor market and inflation; moreover, international comparisons suggested that the Federal Reserve's balance sheet retained ample capacity relative to the scale of the U. S. economy. | 2,019 | 2 |
The Committee also noted in March that although output had continued to expand at a solid pace, new hiring had lagged, and increases in core consumer prices were muted and expected to remain low. | 2,016 | 0 |
Available information suggested that economic activity in the major foreign industrial countries continued to advance, but at an uneven pace; in Germany, activity rebounded from the contraction in the first quarter, while in Japan a considerable slowing of growth had occurred in the second quarter after very rapid expansion in the first quarter. | 2,018 | 2 |
Household spending stepped up in mid-April, coinciding with the first disbursement of stimulus payments to households and a ramp-up in the payout of unemployment benefits, and showed the most pronounced increases in the states that received more benefits.9 With some of the fiscal support measures either provided as one-off payments or slated to come to an end in July, the strength of the recovery will depend importantly on the timing, magnitude, and distribution of additional fiscal support. | 2,007 | 0 |
In their discussion of monetary policy for the intermeeting period, Committee members agreed that the Federal Reserve's large-scale securities purchases were providing financial stimulus that would contribute to the gradual resumption of sustainable economic growth in a context of price stability. | 2,021 | 0 |
Setting the interest rate paid on required and excess reserve balances 15 basis points below the top of the target range for the federal funds rate was intended to foster trading in the federal funds market at rates well within the FOMC's target range. | 2,018 | 2 |
In contrast, blue-collar employment fell sharply in most of the other countries. | 2,007 | 0 |
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 |
Our goal of price stability was achieved by most analysts' definition by mid-2003. | 2,002 | 0 |
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 |
Despite the prevalence and importance of committees in modern central banking, the role of committees in the formulation of policy has not attracted nearly as much academic attention as has the research on monetary policy rules.3 The literature on monetary policy rules stretches back to at least Adam Smith and includes important contributions from David Ricardo, Knut Wicksell, and Milton Friedman.More recently, John Taylor has moved the research agenda forward with his eponymous rule, and a large number of academic papers have been written examining the effectiveness and robustness of policy rules.4 In contrast, as noted, study of the role of committees in making monetary policy has been fairly light, notwithstanding the insightful work of Alan Blinder and others.5 Committees and rules may appear to be in opposition as approaches to policymaking. | 1,999 | 2 |
Given the substantial uncertainty still attached to projections of money growth consistent with the Committee's basic objectives for monetary policy, the members agreed that there was no firm basis for changing the tentative ranges set in July 1996. | 2,010 | 2 |
Those indicators were mixed regarding the pace of economic activity within the manufacturing sector. | 2,000 | 2 |
Even with generous allowances for structural change, labor utilization would seem to be at a level that might eventually begin to put persistent and growing pressure on labor costs and prices. | 2,003 | 1 |
Indeed, some members saw underlying inflation as relatively stable and put low odds on the possibility that prices now were accelerating. | 2,016 | 2 |
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