The Board keeps ‘mum’. The Regionals play ‘tug o´war’

The Federal Reserve Board is still missing two members. At present there are five members including the Chair and Vice-Chair. They all vote, together with five of the twelve regional presidents on a rotating basis. The president of the Federal Reserve Bank of New York has a permanent vote and so does not rotate. It´s as if he were a Board Member.

At present, it´s “five against five”.

Since the start of this year, Board Members (including New York´s Dudley)have kept an eerie silence. Not so the Regional Presidents.

Among those who are “voters” this year:

Richmond´s Jeffrey Lacker:

“There is no pre-set timetable for raising rates…The FOMC’s actions genuinely will depend on the economic data available at the time.”

Atlanta´s Lockhart:

“I believe the first action to raise interest rates will in all likelihood be justified by the middle of the year.”

Chicago´s Evans:

“We shouldn’t be raising rates before 2016 if things transpire as I’m expecting.”

San Francisco´s Williams:

“I see no reason whatsoever to rush to tightening. I don’t see any upside risks to inflation.”

And among the non-voters who nevertheless participate in the discussions:

Boston´s Rosengren:

“I’m willing to be patient” with rate increases, and “if we don’t see any evidence [of rising inflation] in wage and price data for a year, then I’d wait a year before I’d be doing something.”

Philadelphia´s Plosser:

“The economy has returned to a more normal footing, and as such, I believe that monetary policy should follow suit.”

Cleveland´s Loretta Mester:

“I could imagine the interest rates going up in the first half of the year.”

St Louis´s Bullard:

“It is important to get started and to start normalizing policy… I don’t think we can any longer rationalize a zero interest rate policy.”

Minneapolis´ Kocherlakota:

“Raising the target range for the fed funds rate in 2015 would only further retard the pace of the slow recovery in inflation.”

Kansas City Esther George and Dallas´ have not made public speeches this year but we can be certain they belong to the “sooner rather than later” crowd.

Among the voting regional presidents the “score” is tied 2X2 (New York´s Dudley goes along with the Board).

Among the non-voters who participate in the meetings the “hawks” win 5X2.

The meetings will be interesting with the first this year taking place next week, with the Statement released on February 4th.


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