There have been a lot of Fed speakers; so, I’ve selected a few comments on Yellen’s speech, as she has been deemed the most dovish Fed bank president.
Note the shift in rhetoric from ‘market functioning’ to inflation.
Of course, the FOMC’s idea of getting tough and fighting inflation has been to only cut 25 basis points.
Data dependent, this seems to be changing.
It could be the signs of passthrough from headline to core CPI or signs inflation expectations are elevating (as per their recent comments).
They also seem to have lost confidence in their inflation forecasts and may not be giving their future inflation indicators the same weight as in the past 6 months.
by Ros Krasny
(Reuters) – San Francisco Federal Reserve Bank President Janet Yellen said on Wednesday that the federal funds rate has been lowered far enough for now after months of aggressive central bank rate cuts.
The Fed’s key monetary policy tool ‘has come way down,’ Yellen said while critiquing presentations on the economy at a symposium for college students organized by the San Francisco Fed and the Pacific Northwest Regional Economic Conference.
Yellen said the Fed continues to grapple with difficult policy choices but restated that high inflation was a worry. ‘The 1970s were a horrible period. If there’s one thing that has to be very high priority, we don’t want to go back to a period that is anything like that,’ she said.