Nick Timiraos
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The Senate is scheduled to vote Thursday on Fed Chair Jay Powell’s nomination to a second term.
While confirmation is assured (he cleared the banking committee on a 23-1 vote), the final margin could be of some interest given the Fed’s current challenges wsj.com/articles/senat…
On a 91-7 vote, the Senate confirmed Philip Jefferson, an economist and administrator at Davidson College, to a 14-year term on the Federal Reserve's board of governors
Logan made her career at the New York Fed. She came back early from maternity leave in 2008 to deal with the financial crisis. And on Sept. 11, she was one of a handful of bank employees who, escorted by security after taking cover in the basement, returned to the trading desk
In her current position, Logan has been one of the most senior staffers in the Fed system where she is tasked with overseeing the management of the central bank's $9 trillion asset portfolio.
NEWS: Lorie Logan from the New York Fed will be the new president of the Federal Reserve Bank of Dallas
The bigger issue is whether officials begin to get more explicit about a higher terminal rate.
For example, what if the hoped-for rotation from goods spending to services provides insufficient help as it drives up service inflation by an uncomfortable margin?
Powell signaled last week that a 50 bps increase is the new 25 and that the Fed was likely to raise rates by 50 bps in June and July.
The April CPI report doesn't change any of this. wsj.com/articles/april…
Fed governor Christopher Waller, yesterday: “At this point, I don’t care what the reasons are. Inflation’s too high and my job is to get it down.” twitter.com/conorsen/statu…
Core inflation rose 0.6% in April and was 6.2% above its year earlier level in the consumer price index. Headline inflation slowed due to a large drop in energy. wsj.com/articles/us-in…
Vice President Kamala Harris cast the tie-breaking vote to confirm Lisa Cook to the Federal Reserve on Tuesday evening, 51-50, making Ms. Cook the first Black woman to serve on the central bank’s board of directors wsj.com/articles/senat…
Cook has been nominated to fill the unexpired portion of the 14-year term Janet Yellen took in 2010. It runs through January 2024.
Nellie Liang and Judy Shelton were previously nominated but not confirmed to the seat.
Senate Democrats voted to end debate on the nomination of Lisa Cook, 50-49, to the Federal Reserve.
She is set to be confirmed Tuesday evening as the first Black woman on the central bank's board of governors. wsj.com/articles/senat…
Waller sounds very skeptical of conducting bank stress tests focused on climate risks.
The Fed should make sure banks are resilient, period, without regard to the cause.
"Why is that [climate risk] being singled out of all the things that could cause financial problems?"
Waller says it is hard to see anything bad happening to the housing market (he knocks on the table after saying this) because supplies of homes for sale are scarce and demand is set to build from the children of Baby Boomers, the second largest generation in US history.
Waller answers critics of the Fed using asset purchases (quantitative easing) once it has cut rates to zero:
The alternative is that the Fed had just said, "OK, we’re done. Close up shop. 'Good luck, America.' That’s not what we do."
Fed governor Chris Waller, who has favored tighter policy, explains how he wasn't terribly concerned about inflation before the pandemic:
"In part this is why President Trump picked me. He thought I was a total dove. It's easy to be a dove when inflation's running below 2%."
Yellen and her husband, George Akerlof, conducted a study in the 1990s on the rise in out-of-wedlock births:
"Although many observers expected liberalized abortion and contraception to lead to fewer out-of-wedlock births, the opposite happened" brookings.edu/articles/new-m…
Treasury Secretary Janet Yellen, at a banking committee hearing, says eliminating access to abortion “would have very damaging effects on the economy and would set women back decades.” youtube.com/watch?v=nbXZCG…
Was the Fed's new framework the chief reason the central bank was late?
The way the framework was put into operation collided with the supply shocks of 2020-21 and demand shock of 2021 in a very unfortunate way, as I explain in this podcast youtu.be/utS5qMeQMUA
This from @NickTimiraos is spot on.
50 bps at consecutive meetings is a more aggressive pace than at any time since the 1980s. Focusing on "not 75 bps" misses this.
But big question is where the Fed ends up: 3, 4, 5% or more? Lot of uncertainty there
createsend.com/t/d-E57B1CD32E…
Retweeted by Nick Timiraos High inflation in the 1970s was accompanied by a weakening dollar.
Today, the dollar is reaching multidecade highs against U.S. trading partners.
Inflation and growth prospects in other countries are worse.
wsj.com/articles/dolla…
My take on last week’s Fed meeting: (be sure to subscribe to the Real Time Economics newsletter)
Now that the Fed has graduated to raising rates in half-point increments at consecutive meetings, the pace has become less meaningful than the destination." createsend.com/t/d-E57B1CD32E…
Goldman: For the first time since the price surge started in early 2021, we have revised our end-2022 core PCE forecasts down rather than up…
Even on a sequential basis, our GS core trimmed PCE index slowed to just 2% (annualized) in March.
I wish I had gotten this story into my recently released book. If you’re into this sort of history, check it out.
There’s the time Volcker told Nixon to take a recession early in his term.
And Trump’s reaction when he met Quarles for his Fed interview: nicktimiraos.com
The point of the story: “This is an institution from top to bottom that knows that the one great sin that will be remembered by everyone 50 years later is if you let inflation get out of control.”
One of the paintings on the walls of his office was by Arthur Burns. Quarles proceeded to explain who Burns was.
The guard stopped him. “Oh my God, that's the guy who let inflation get outta control.”
Randy Quarles, who until last year was the Fed’s vice chair of supervision, said the answer was “Yes.”
Working late at night, he would sometimes set off a security alarm in the Eccles building. One night, he was showing the art in his office to the guard who had come running.
Is the Fed prepared to bring down inflation if that requires throwing people out of work?
That was the question posed to three current or former Fed officials Friday night at Stanford.
What followed was a story about a panic button, a security guard, and a piece of art:
Back in 1997, the longstanding positive correlation between stocks and bonds reversed. @GZuckerman & I were there to record the event & quoted @shulmaven. A sign of my age that I can now record the reversal of the reversal. wsj.com/articles/SB878… twitter.com/greg_ip/status…
Retweeted by Nick Timiraos All Nigerian airlines say they will stop flying their domestic routes indefinitely from Monday after spike in jet-fuel prices — emerging markets are getting priced out as refined oil product prices skyrocket | #OOTT #nigeria guardian.ng/news/local-air…
Retweeted by Nick Timiraos Am really enjoying "Trillion Dollar Triage" by @NickTimiraos. If you are into recent economic history, it's a good read.
Retweeted by Nick Timiraos Jim Bullard: We used the playbook from 2012-14 on talking about tapering, then tapering, going slow and incrementally to reverse stimulus.
"That was an error.... We eventually had to chuck the whole playbook."
Randy Quarles: The Fed fell behind the curve not because of its new framework but because of tactical issues related to its implementation and the "fog of war."
Bullard: "If inflation expectations go higher, it's going to be very difficult to control inflation in the U.S."
"Many of our critics tend to focus only on the inflation aspect of our mandate and ignore the employment leg... But we cannot. So what may appear as a policy error to some was viewed as appropriate policy by others based on their views regarding the health of the labor market."
Fed governor Christopher Waller explains how the central bank fell behind:
-The Fed made assurances (called forward guidance) in late 2020 that conditioned removing stimulus on labor market gains
-The labor market was unusually difficult to forecast
federalreserve.gov/newsevents/spe…
I asked Summers about this in our interview shortly after his panel presentation at Stanford. You can see his response here (about halfway through the video below) twitter.com/WSJ/status/152…
What's especially notable about this comment is that the Fed to a significant degree heeded Summers' call from four years ago. Here's a report he presented at Brookings in 2018, where he said the Fed urgently needed a new framework: brookings.edu/research/why-t…
Earlier today, Larry Summers delivered a withering critique of the Fed's new framework while on a panel right next to Rich Clarida, who helped run that process.
His comment:
Former U.S. Treasury Secretary Larry Summers speaks with WSJ’s @NickTimiraos about the Fed’s rate increase and the U.S. economic outlook twitter.com/i/broadcasts/1…
Retweeted by Nick Timiraos Larry Summers: The Fed is making a major analytical error
Every time a Fed official speaks of raising rates above neutral and defines neutral as 2.5% because they think inflation is going to be 2%, they are engaged in an extraordinary exercise of assume-a-can-opener economics
Neel Kashkari: Fed guidance has helped bring long-term real rates back to the level they were at before the pandemic, which I judged was roughly a neutral stance.
(The Fed still has to follow through on rate rises that have been priced in to get there) minneapolisfed.org/article/2022/p…
Former Fed vice chair Rich Clarida says even under the most plausible best case scenario the Fed will need to raise its policy rate to at least 3.5% wsj.com/articles/ex-fe…
The fifth was a stronger-than-expected payroll release on a low-liquidity Friday around the July 4th holiday in 2013, and the sixth was in December 2015 when the ECB disappointed market’s expectations for additional stimulus
JPM: There have only been 6 instances over the last decade in which 30-year bond yields rose more than today
Top 3 were all amid the worst of market dysfunction in March 2020, the fourth was the day after Trump’s election.
Vincent Reinhart: "Powell went into the March meeting thinking they were going to present a robust pivot. They thought they were doing something really heroic, and they just got hammered. And now they’re in a position of playing catch-up.” wsj.com/articles/fed-a…
And because history sometimes rhymes, here's how Paul Volcker opened his famous Saturday, October 6, 1979 press conference (including by knocking down rumors of his resignation and worse just two months into the job)
This was a theme I encountered while reporting out my book. If you say you are going to do something, you need to follow through to ensure that your words continue to be credible. An example: amazon.com/Trillion-Dolla…
Jay Powell often puts the most meaningful takeaway from his press conference in the opening few sentences, dating to his second one in June 2018, when he offered a "plain-English" summary
With that in mind, the *key* part of today's communications was at the very top.
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