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Dataset card Data Studio Files
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1,348
In this regard, members referred to earlier unsustainable rates of investment by many high-tech firms that were now obliged to retrench despite still high rates of growth in the demand for their products and services.
2,010
1
hawkish
1,349
In these models, each asset price contains a risk premium that represents the additional return demanded by risk-averse investors for bearing risk.
2,020
2
neutral
1,350
During the five years before the crisis, core goods made a small negative contribution to inflation.
2,000
0
dovish
1,351
In the view of a number of members, rapid growth of the monetary aggregates, though it had slowed very recently, was a further indication that financial conditions were not restraining economic activity.
1,996
1
hawkish
1,352
In their discussion of monetary policy for the period ahead, members agreed that it would be appropriate to maintain the existing highly accommodative stance of monetary policy.
2,021
0
dovish
1,353
Long-run price stability certainly is essential for achieving maximum employment.
2,005
1
hawkish
1,354
The Federal Reserve takes into account the spillovers of higher interest rates, a stronger dollar, and weaker demand from foreign economies into the United States, as well as in the reverse direction.
2,020
0
dovish
1,355
Staff Review of the Financial Situation On balance, financial conditions in the United States remained supportive of growth in economic activity and employment: The expected path of the federal funds rate was slightly lower in the long run, yields on longer-term Treasury securities moved down modestly, equity prices rose, corporate bond spreads narrowed, and the foreign exchange value of the dollar was little changed.
2,001
0
dovish
1,356
And the equity market itself has been the subject of analysis as we attempt to assess the implications for financial and economic stability of the extraordinary rise in equity prices--a rise based apparently on continuing upward revisions in estimates of our corporations' already robust long-term earning prospects.
2,000
1
hawkish
1,357
Real residential investment appeared to have declined again in the fourth quarter, likely reflecting in part decreases in the affordability of housing arising from both the net increase in mortgage interest rates over the past year and ongoing, though somewhat slower, house price appreciation.
2,008
1
hawkish
1,358
Petroleum prices have been under particular pressure, reflecting not only stronger demand but also risks that supplies could be constrained by terrorism or political disruption.
2,002
1
hawkish
1,359
And it may generally take longer still for a policy change to alter the course of inflation.
1,998
2
neutral
1,360
Indeed, CPI inflation does appear to have become more sensitive to import prices over time, both in the United States and in other OECD countries (Pain, Koske, and Sollie, 2006).3 Can domestic monetary policy still control domestic interest rates and so stabilize both inflation and output?
2,019
2
neutral
1,361
And it’s natural that if it can be employed that, just as monetary policy is doing a lot to try to June 15, 2016 stimulate growth, that fiscal policy should play a role.
2,020
0
dovish
1,362
Because there is considerable uncertainty about the persistence, breadth, and magnitude of climate-related shocks to the economy, it could be challenging to assess what adjustments to monetary policy are likely to be most effective at keeping the economy operating at potential with maximum employment and price stability.8 We need only look back to the oil price shocks of the 1970s and 1980s to see how difficult it was for monetary policymakers to assess accurately the likely persistence of the effects on inflation and output and the appropriate response.
2,007
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neutral
1,363
A few participants particularly stressed the high uncertainty associated with the expected future path of the unemployment rate and commented that the unemployment rate could rise by considerably more than in the staff forecast.
2,020
0
dovish
1,364
And I think, more broadly, monetary policy is also supporting household spending and home buying by keeping the labor market strong, keeping workers’ incomes rising, and keeping consumer confidence at high levels, where it currently is.
2,019
0
dovish
1,365
Labor market conditions had improved further, with solid job gains and a lower unemployment rate; taken as a whole, labor market indicators suggested that the underutilization of labor resources was continuing to diminish.
2,005
1
hawkish
1,366
In the United Kingdom, however, gilt yields declined and the pound weakened against the dollar in response to weaker-than-expected inflation data and to an upward revision by the Bank of England, at its early February policy meeting, of its assessment of the degree of slack in the labor market.
2,022
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dovish
1,367
In considering the statement to be released following this meeting, members concurred that it should note that even with the rise in oil prices, the expansion remained firm and labor markets continued to improve gradually.
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hawkish
1,368
The central tendency rises to 2.4 to 2.7 percent next year, somewhat above estimates of the longer-run growth rate.
2,012
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hawkish
1,369
This is perhaps because the emphasis on price stability is taken by some as carrying a hint of restrictive policy and as an inclination to always be leaning against cyclical increases in demand.
2,020
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neutral
1,370
The foreign exchange value of the dollar, which depreciated immediately following the FOMC's November announcement of further asset purchases, subsequently appreciated amid intensifying concerns about stresses in the euro area and some apparent reassessment by investors of the monetary policy outlook in the United States.
2,007
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dovish
1,371
The Federal Open Market Committee (FOMC) has been responsible for monetary policy decisions in the United States since it was established by the Banking Act of 1935, two decades after the founding of the Fed itself.2 The movement toward committees reflects the advantages of committees in aggregating a wide range of information, perspectives, and models.
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neutral
1,372
To do that you've got to have price stability, and we've got to get back to price stability so that we can have a labor market where people's wages aren't being eaten up by inflation and where we can have a long expansion too.
2,021
1
hawkish
1,373
Job gains had been strong, on average, in recent months, and the unemployment rate had remained low.
2,005
1
hawkish
1,374
House price appreciation appeared to have slowed from the elevated rates seen over the past summer.
2,001
2
neutral
1,375
In these circumstances, domestic demand would need to decelerate considerably for growth to proceed at a sustainable pace.
2,022
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hawkish
1,376
And that is a statement about productivity growth, which has been pretty disappointing.
2,020
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1,377
By definition, this excess of U.S. payments to foreigners over payments received in a given period equals the U.S. current account deficit, which, as I have already noted, was $666 billion in 2004--close to the $617 billion by which the value of U.S. imports exceeded that of exports.
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hawkish
1,378
still being clear about the Committee's intention to provide the monetary accommodation needed to support a return to maximum employment and stable prices.
2,008
0
dovish
1,379
While deflation appears to have eased in Japan recently, it is difficult to know how much of the improvement is due to monetary policy, and, of the part due to monetary policy, how much is due to the zero-interest-rate policy and how much to quantitative easing.
2,019
0
dovish
1,380
Whether one looks at trailing or forward price-to-earnings ratios, equity risk premiums, or option prices, there is little basis for arguing that markets show excessive optimism about future returns.
1,999
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neutral
1,381
A few participants also noted that uncertainty about the extent of resource slack in the economy was considerable and that it was quite possible that the economy could soon be operating close to potential, particularly if labor force participation rates did not turn up much while employment continued to register gains.
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neutral
1,382
The effect of a productivity slowdown on employment growth is likewise ambiguous in the medium term.
2,005
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neutral
1,383
Yet, with a few exceptions, the available data show that productivity growth in other advanced countries has not increased to the extent seen in the United States.
1,999
0
dovish
1,384
Indeed, an oft-quoted quip by economist Robert Solow held that, as of the late 1980s, "computers are everywhere except in the productivity statistics.
2,006
2
neutral
1,385
Although participants had revised downward their projections for growth since their previous forecasts in June, they continued to anticipate that economic growth would pick up and the unemployment rate would decline gradually through 2014.
2,000
2
neutral
1,386
The price of a ton of cold rolled steel sheet, or a linear yard of cotton broad-woven fabrics, could be reasonably compared over a period of years.
2,022
2
neutral
1,387
Moreover, the staff still judged that the risks to the forecast for real GDP growth were tilted to the downside, with a corresponding skew to the upside for the unemployment rate.
2,002
0
dovish
1,388
Several participants noted ongoing challenges in the agricultural sector, including those associated with increased trade uncertainty, weak export demand, and the effects of wet weather and severe flooding.
2,017
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neutral
1,389
We are not seeing any evidence to date that a strong labor market is putting excessive cost-push pressure on price inflation.
2,003
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neutral
1,390
Yet as research has repeatedly demonstrated, these sorts of fundamentals only explain a small part of the variation in the prices of assets such as equities, long-term Treasury securities, and corporate bonds.
1,999
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neutral
1,391
Despite the substantial monetary easing that had been implemented already and the fiscal stimulus, including federal tax rebates, that was in train, the forecast anticipated that sluggish hiring and the decline in household wealth would restrain the growth of both consumer spending and housing demand.
1,999
0
dovish
1,392
Depository institutions continued to bid aggressively for 28-day funds at the Term Auction Facility (TAF) during the intermeeting period, and demand for funds was strong at both of the 84-day TAF auctions.
1,999
0
dovish
1,393
Money versus Interest Rates For most of the post-World War II period, monetary economists have vigorously debated whether the Fed should target money or interest rates in setting policy.
1,997
2
neutral
1,394
In these circumstances, a pause seemed desirable to monitor the still-incomplete effects of the Committee's easing over the past year--a significant part of which had been implemented in recent months--and the contours of the turnaround in economic activity.
2,022
0
dovish
1,395
The monitoring range for growth of total domestic nonfinancial debt was set at 3 to 7 percent for the year.
2,012
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neutral
1,396
But we are also searching for an absolute concept, the point of balance between supply and demand in the respective markets that divides excess demand from excess supply--in effect, the origin in a diagram relating inflation to excess demand and supply.
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neutral
1,397
Meeting Participants' Views and Committee Policy ActionIn conjunction with this FOMC meeting, all meeting participants-the four members of the Board of Governors and the presidents of the twelve Federal Reserve Banks-provided projections for economic growth, the unemployment rate, and consumer price inflation for each year from 2009 through 2011.
2,003
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neutral
1,398
Therefore, maximum employment (at least if interpreted as full employment or being at NAIRU) and price stability, the statutory mandate of the Federal Reserve, are compatible in the long run.
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neutral
1,399
Once this process is completed, however, we might expect consumer price inflation to move into better alignment with long-run expectations and thus settle in around 2 percent.
2,017
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neutral
1,400
M3 growth slowed less than that of M2 in November, in part because of stepped-up issuance of large time deposits as banks reduced their reliance on funding from overseas offices.
2,017
1
hawkish
1,401
Despite a large increase in the overall consumer price index for September, measures of inflation compensation calculated using yields on nominal and inflation-protected Treasury securities were about unchanged over the intermeeting period, although they remained a bit above the levels seen before Hurricane Katrina.
1,999
1
hawkish
1,402
To be sure, financial market signals are noisy, and day-to-day movements in asset prices are unlikely to tell us much about the cyclical or structural position of the economy, let alone r* and expected inflation.
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neutral
1,403
To provide some evidence for this assertion, as well as some reasons for it, I draw your attention to a speech that Chairman Greenspan made earlier this year, entitled "Risk and Uncertainty in Monetary Policy" (Greenspan, 2004).
2,003
2
neutral
1,404
Some participants suggested that the persistently high level of unemployment reflected the impact of structural factors, including mismatches between the skills of the unemployed and the skills demanded in sectors in which jobs were currently available.
2,017
2
neutral
1,405
The prospect of additional fiscal stimulus likely contributed to a steeper U. S. Treasury yield curve, increased inflation compensation, and broad dollar depreciation.
2,012
1
hawkish
1,406
In contrast, a few participants cautioned that, despite increases in market-based measures of inflation compensation in recent months and the stabilization of some survey measures of inflation expectations, the levels of these indicators remained too low to be consistent with the Committee's 2 percent inflation objective.
2,018
0
dovish
1,407
Some participants believed that considerable labor market slack remained, especially when indicators other than the unemployment rate were taken into account, including the unusually large fraction of the labor force working part time for economic reasons.
2,006
0
dovish
1,408
Less uncertainty about future inflation could lower the risk premiums on nominal Treasury bonds, lowering the risk-free interest rate.
2,005
0
dovish
1,409
Most participants remarked that the standard of "substantial further progress" had been met with regard to the Committee's price-stability goal or that it was likely to be met soon.
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hawkish
1,410
Econometric methods were also refined to improve estimation and to accommodate more-complex dynamics in money demand equations.
2,000
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neutral
1,411
To do this will demand not only greater specialized knowledge, but also an ability to deal with risk and uncertainty.
2,021
2
neutral
1,412
Moreover, measures of labor compensation showed only moderate gains while relatively wide profit margins could allow firms to absorb somewhat larger increases in labor and other costs without boosting prices.
2,019
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neutral
1,413
Back then, FOMC participants were forecasting unemployment rates around 7-3/4 percent and 7 percent for year-end 2013 and 2014, respectively, in our Summary of Economic Projections; as of the June 2013 round, these forecasts have been revised down roughly 1/2 percentage point each.
2,022
2
neutral
1,414
And inflation is moving—moving up, I think, toward our 2 percent objective.
2,020
0
dovish
1,415
Participants generally expected that household demand would gradually strengthen over coming quarters in response to the rise in household wealth from the substantial increase in equity prices that had occurred over the intermeeting period as well as the support for income provided by fiscal policy.
2,011
1
hawkish
1,416
The persistence of underutilized resources was expected to foster some moderation in core price inflation.
2,013
2
neutral
1,417
On the upside, bottlenecks, supply disruptions, and historically high rates of resource utilization were seen as potential sources of greater-than-expected inflationary pressures, particularly if there were a significant rise in inflation expectations that altered inflation dynamics.
1,998
1
hawkish
1,418
To quantify the importance of the shift in the balance of demand and supply and of the consequent change in the term premium, we can appeal to the research literature on the term structure of interest rates.
2,003
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neutral
1,419
These members indicated that the economic outlook remained positive and that they anticipated, under an unchanged policy stance, continued strong labor market conditions and solid growth in activity, with inflation gradually moving up to the Committee's 2 percent objective.
2,002
2
neutral
1,420
The lagged effects of the substantial easing in monetary policy this year and the fiscal stimulus measures already enacted into law were expected to buttress demand and economic recovery over the next year.
2,010
0
dovish
1,421
Theory also teaches that the increase in the rate of return on capital--even if generated by a rise in the growth rate of technical change--ultimately requires an increase in real market interest rates.
2,004
1
hawkish
1,423
Increases in the prices of energy, other commodities, and non-oil imports, as well as reports from some business contacts that higher costs were increasingly being passed through to prices, suggested that the downtrend in inflation had ended.
2,008
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hawkish
1,424
Many expected those conditions to be met later this year, although several members were concerned about downside risks to the outlook for real activity and inflation.
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dovish
1,425
Monetary policy has a role, and it really is in, you know—our original role was providing liquidity to financial systems when they’re under stress, and that’s—that’s really part of what we did today.
2,014
0
dovish
1,426
Indeed, a number of members saw merit in the staff forecast that some further disinflation was a likely prospect in such circumstances.
2,008
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dovish
1,427
These arguments imply that slack in labor markets remains considerable and therefore that a reduction in the unemployment rate toward its longer-run normal level would not have much effect on inflation.
2,020
0
dovish
1,428
In contrast, changes in inflation rates in some services categories, such as shelter costs, tend to be more persistent.
2,007
2
neutral
1,429
Looking beyond this spring, my views on the appropriate pace of interest rate increases and balance sheet reduction for this year and beyond will depend on how the economy evolves.
2,021
2
neutral
1,430
The absence of further large gains in stock prices, should recent trends persist, would remove this stimulus and probably induce some moderation in the growth of consumer spending.
2,010
2
neutral
1,431
M2 expanded in February, however, as liquid deposits resumed their growth.
2,008
0
dovish
1,432
Profit margins have been running a little higher this year than last, aided importantly by strong growth in labor productivity.
2,001
0
dovish
1,433
Households' longer-term inflation expectations also edged up in both November and December.
2,020
1
hawkish
1,435
The unemployment rate is at a 50-year low, inflation is close to our 2 percent objective, gross domestic product growth is solid, and the Federal Open Market Committee's (FOMC) baseline outlook is for a continuation of this performance in 2020.2 At present, personal consumption expenditures (PCE) price inflation is running somewhat below our 2 percent objective,
1,999
2
neutral
1,436
The corresponding depreciation in other countries currencies will result in a gradual increase in the foreign currency price of U.S. exports, compared to the prices of foreign produced goods.
2,004
0
dovish
1,437
There is, to be sure, no trade-off and hence no inconsistency between full employment and price stability in the long run.
2,005
2
neutral
1,438
remained well below their levels at the beginning of the year, and that weaker demand and earlier declines in oil prices had been holding down consumer price inflation.
1,996
1
hawkish
1,439
We understand that inflation dynamics evolve constantly over time, but they don’t change rapidly.
2,019
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neutral
1,440
Our mandate, sorry, is price inflation.
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1,441
the new statement maintains our definition that the longer-run goal for inflation is 2 percent, it elevates the importance—and the challenge—of keeping inflation expectations well anchored at 2 percent in a world in which an effective-lower-bound constraint is, in downturns, binding on the federal funds rate.5 To this end, the new statement conveys the Committee's judgment that, in order to anchor expectations at the 2 percent level consistent with price stability, it will conduct policy to achieve inflation outcomes that keep long-run inflation expectations anchored at our 2 percent longer-run goal.
2,005
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hawkish
1,442
The bulk of the variation comes from what finance academics call "changes in discount rates," which is a fancy way of saying the non-fundamental stuff that we don't understand very well--and which can include changes in either investor sentiment or risk aversion, price movements due to forced selling by either levered investors or convexity hedgers, and a variety of other effects that fall under the broad heading of internal market dynamics.
2,021
2
neutral
1,443
Some members observed that while slower growth in consumer spending was the most probable forecast, they saw an upside risk from the wealth effects of the large rise that had occurred in the value of stock market holdings.
2,013
2
neutral
1,444
First, if, as projected, core PCE inflation this year does come in at, or certainly above, 3 percent, I will consider that much more than a "moderate" overshoot of our 2 percent longer-run inflation objective.
2,005
1
hawkish
1,445
Risks to the inflation projection also were seen as balanced.
2,018
2
neutral
1,446
But many other commodity prices have fallen further, and the reason I would give for that is that the emerging markets—China, the rest of Asia, and some other parts of the world—plus Europe, of course, are softer, and so global commodity demand is weaker.
2,020
0
dovish
1,447
Because economic downturns typically result in even greater uncertainty about asset values, such episodes may involve an adverse feedback loop whereby financial disruptions cause investment and consumer spending to decline, which, in turn, causes economic activity to contract.
2,003
0
dovish
1,448
Over the intermeeting period, yields on short- and intermediate-term nominal Treasury securities fell, while yields on inflation-indexed Treasury securities of comparable maturity increased somewhat, pushing inflation compensation considerably lower at those horizons.
2,019
0
dovish
1,449
Most participants expected that, following the slowdown in the first quarter, real economic activity would resume expansion at a moderate pace, and that labor market conditions would improve further.
2,007
2
neutral