Infighting at the FOMC

According to the Minutes from the July meeting:

“Some participants expressed the view that the incoming information had not yet provided grounds for reasonable confidence that inflation would move back to 2 percent over the medium term and that the inflation outlook thus might not soon meet one of the conditions established by the [Fed] for initiating a firming of policy,” the minutes said.

Some also worried about moving prematurely and lacking tools to address downside shocks to the economy, and about downside risks to the economy from developments abroad, particularly China.

There was push back against hesitating. A number of officials argued that a rate increase could convey confidence to the world about the economic outlook and that the Fed needed to move in acknowledgment of the progress the economy had already made toward normalcy.

Desperadoes_1The “desperadoes” at the FOMC want to “shoot ´em up”! To them, the economy “deserves a rate hike”!

 

Meanwhile, CPI inflation is keeping it´s distance from the target (2.35% equivalent to 2% PCE)

Desperadoes_2

Update:

According to Tim Duy:

Former Federal Reserve Governor Lawrence Meyer is also interesting here:

“What are you worrying about, September or December? It doesn’t matter. Just pull the trigger,” said Laurence Meyer, co-founder of Macroeconomic Advisers, a research firm, in an interview before the release of the minutes.

4 thoughts on “Infighting at the FOMC

  1. Is the first “some” the same as the second “some”? And how many more are they versus “a number”?

  2. I think a reasonable compromise between the two apparent factions would be to take Scott Sumner’s recommendations on the first step to policy normalization by ending IOeR. Those who want to convey confidence in the economic outlook by normalizing policy would get some movement in that direction, and those who are not yet convinced it is time for a rate hike due to downside risk would have their concerns addressed. Ending IOeR without a rate hike is win-win.

  3. Looks like “a number” is very close to be more than two “some”s. September may not happen but only because it is so close. Kocherlakota getting more vocal may be because he realises just how close the decision now is, and how important to stop. May well not have to wait five years for the transcripts.

    Too many “may”s!

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