Overshadowed?

November – “As monetary policy operates with a lag, the full effects of these adjustments on economic growth, the job market, and inflation will be realized over time. We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook of moderate economic growth, a strong labor market, and inflation near our symmetric 2 percent objective.”

5. October – “Looking ahead, we’ll be monitoring the effects of our policy actions, along with other information bearing on the outlook, as we assess the appropriate path of the target range for the fed funds rate. Of course, if developments emerge that cause a material reassessment of our outlook, we would respond accordingly. Policy is not on a preset course.”

November – “We will be monitoring the effects of our policy actions, along with other information bearing on the outlook, as we assess the appropriate path of the target range for the federal funds rate. Of course, if developments emerge that cause a material reassessment of our outlook, we would respond accordingly. Policy is not on a preset course.”

One notable change from language used in earlier press conferences was related to his discussion of what could cause the FOMC to cut rates further. In previous press conferences, Powell used the term uncertainty to describe how slow growth abroad and trade issues were affecting the economy. As we have noted previously, to economists the term uncertainty applies when they cannot assess the probability that certain events will occur, and thus Powell is saying that it is not clear whether or how cuts in a policy rate might offset possible negative outcomes. However, in his September presentation to Congress, Chairman Powell used the term risk to note that “… sluggish growth abroad and trade developments have weighed on the economy and pose ongoing risks.” This language suggests that there is a subtle but significant change in how the Committee might be now viewing those two factors, and the previous policy moves may now be viewed as risk insurance again possible negative impacts that trade and the global slowdown may have on the economy.

View single page >> |

Disclaimer: The preceding was provided by Cumberland Advisors, Home Office: One Sarasota Tower, 2 N. Tamiami Trail, Suite 303, Sarasota, FL 34236; New Jersey Office: 614 Landis Ave, Vineland, NJ ...

more
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.