Thursday, November 12, 2015

BREAKING: Fed’s Dudley Points Toward Rate Hike

The risks of the Federal Reserve moving too quickly or too slowly are nearly balanced, New York Fed President William Dudley said Thursday, pointing to a rate hike on the horizon, concludes CNBC.

More detail from his speech:
 I think it is quite possible that the conditions the Committee has established to begin to normalize monetary policy could soon be satisfied.  In particular, I will be evaluating the incoming information to see if it confirms my expectation that growth will be sufficient to further tighten the U.S. labor market.
After lift-off commences, I expect that the pace of tightening will be quite gradual.  In part, that is because monetary policy is not as stimulative as the low level of the federal funds rate might suggest.  There is strong evidence that the short-term neutral real interest rate—let’s call that r*—is currently quite low, certainly below the level that historically has applied on a longer-term basis...
 I see the risks right now of moving too quickly versus moving too slowly as nearly balanced.  The weight that one puts on each undoubtedly influences one’s views on when the time will be right to begin to normalize monetary policy and the appropriate short-term rate trajectory thereafter. 
The full speech is here.


  1. CPI numbers will be released next Tuesday, 17th. Let's not count our data before it's released.... Tomorrow the PPI numbers will be release if it is as low as I think it will be...the CPI will be toast too.

    Let's see them jack up interest rates when there's hardly inflation...I call BS.

  2. That decision has already been made. The fate of the entire economy is not actually hinging on one month's shaked and baked government stats. Though if it were, they seem less concerned with low inflation and bad economic indicators than poor jobs numbers, which makes sense, since that's where they get the most political heat.

    In any case they have no shortage of excuses to once again do nothing. Given they will look like idiots having to lower again in 2016 after markets melt and the economy begins to careen off the primrose path in response to a rate rise, I estimate a 95%+ chance they will not raise.

    All this chatter about raising is just telling everyone what they want to hear. It’s breadcrumbs to keep the flock in tow, hooked on, focused on, and buying into their perpetual, melodic story of how great the economy is doing. That way everyone will keep ignoring all the glaring signs it is not. “Pshaw, how could the economy not be great; didn’t you hear, the Fed is just about to raise rates!” All cons rely on distraction.