Biden’s super dovish stance on the Fed sounds a bit hawkish
So what does it sound like? when the pigeon cries?
Probably something like this:
For now, we believe the risks to our dual mission are approximately balanced. Although our policy stance is restrictive, the target range for the federal funds rate has been stable for some time, and the latest economic outlook summary from FOMC participants suggests that rates could reach peak levels if the economy progresses as expected. It is suggested that there is. . If inflation and the labor market continue to cool, it may be appropriate at some point to lower the target range for the federal funds rate. On the other hand, if the development of disinflation stalls, it may be appropriate to keep the target range stable at its current level for an extended period of time to ensure the continued progress of our dual mandate. do not have.
They are, prepared comments of Federal Reserve President Adriana Deborah Kugler for a meeting at the Brookings Institution on Wednesday morning.
Coogler is considered one of them. the most dovish member The short tenure of the Fed director means that much of the speculation is based on her background rather than what she actually did at the central bank.
Federal Reserve Board member Adriana Kugler speaks at the Brookings Institution in Washington, DC, on February 7, 2024. (Al Drago/Bloomberg via Getty Images)
Her background is usually described as follows. “Labor Economist” This is a code that describes economists whose work supports or defends Democratic Party policies, usually labeled as pro-worker. She was the chief economist at the U.S. Department of Labor at the end of 2019. barack obamaThe beginning of the first and second periods.
She was appointed to the Federal Reserve Board by: President Joe Biden It was passed last spring and approved by the Senate in September. Although there was not much public controversy over her nomination, The approval vote received 45 votes against., all from Republicans. With his background as a labor economist, he was widely expected to emphasize the employment side of the Fed’s dual responsibilities, rather than the inflation side.
Those who supported her nomination were people with hardships. senator bob menendez (D-N.J.) She said she would “ultimately bring the experience of being a Latino in the United States to the Federal Reserve System.” Establishment media headlines described her as the “first Latina” to join the Fed board.
This isn’t just a dovish biography of the Fed of old. This is a biography of a person who is expected to. ultra dove, a leader in favor of rate cuts who preaches complacency when it comes to inflation. I wouldn’t be surprised to find her alongside so many left-wing economists and economic commentators. Mr. Paul Krugman new york timesare declaring victory over inflation and calling for interest rate cuts as soon as possible.
There are concerns about stagnation in disinflation.
still Kugler’s statement is filled with caution about interest rates. He said interest rates were at a “peak” and were not expected to rise any further. But he said cutting rates could be appropriate “at some point,” meaning cutting rates is not yet appropriate. He also said the economy needs “continued cooling of inflation and the labor market” before a rate cut is called for.
Amazingly, she also has the potential for that to happen. It is appropriate to keep interest rates stable If disinflation stagnates, it will last even longer. This does not present itself as a highly unlikely development, but must be viewed in terms of risks roughly commensurate with the economic slowdown that threatens to weaken the labor market.
Coogler isn’t alone
Boston Fed President susan collinsMr. Kugler, who does not have a vote on monetary policy this year, echoed Mr. Kugler’s opinion on Wednesday, saying, “Before we begin to make a prudent adjustment to monetary policy stance, it is more likely than not that the disinflationary process will continue,” according to the newspaper. He said he was looking for “proof of this.” The Boston Fed’s official summary of his remarks.
Richmond Federal Reserve President: “I strongly support working patiently to get to the point we need to reach.” thomas birkin He told the Economic Club of Washington, D.C., on Wednesday. “For now, I see the trade-offs, which are beginning to balance out, as still favoring continued anti-inflation measures.”
Minneapolis Fed President Neel Kashkari speaks in an interview in New York on November 7, 2023. (Victor J. Blue/Bloomberg via Getty Images)
Neel KashkariThe Fed, who is sometimes very dovish and sometimes very hawkish on inflation, was even more specific, saying in an interview on CNBC that he thinks the Fed will only cut rates two or three times this year.
Be aware of the dangers, Disinflation stall This is something that is currently lacking in most analytics and financial markets. The consensus view is that inflation will continue to decline, perhaps with some hiccups, and that lower inflation will create the economic space needed to cut interest rates. If they are lower, the Fed can lower nominal interest rates without lowering real interest rates.
But the idea is not lost on Fed officials like Mr. Kugler. pigeon feather background. And if investors are paying attention, it probably won’t be lost on the market for long.
