Warding off the hawks

Bullard thinks rates should start rising in the first quarter of 2015. Plosser and Fisher dissented from the extended period language. To mellow them down Yellen has fabricated a great excuse for her own views. According to the WSJ:

Federal Reserve officials have become more concerned that weak overseas growth and a strengthening U.S. dollar will crimp the domestic economy and hold down inflation, an outlook that has made them more inclined to stick to low interest rates.

Several officials worried at a Sept. 16-17 policy meeting that disappointing growth in Europe, Japan and China could restrain U.S. exports, according to minutes of the meeting released by the Fed Wednesday with the regular three-week lag. Meantime, the stronger currency—by reducing the cost of imported goods and services and putting downward pressure on commodities prices—could hold U.S. inflation below the Fed’s 2% objective. The Fed staff slightly reduced its projection for medium-run growth in part because of these concerns.

Sometimes “reasoning from a component change” has its uses!

Update:

Stan Fischer “supports” Janet:

Mr. Fischer, during an event at the Brookings Institution think tank, said the Fed’s focus is on inflation and employment. “We have to take into account the impact on aggregate demand of the factors that affect aggregate demand, and the exchange rate will, to some extent, affect aggregate demand,” he said. “So that is the channel through which the exchange rate will affect our decisions. It won’t be a separate factor.”

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