TextCEsInFinance/fomc-communication

index int64 0 1.98k	text stringlengths 13 1.05k	year int64 2k 2.02k	label int64 0 2	text_label stringclasses 3 values
627	And then we’ll look to have that just running in the background and have—and have the interest rates, again, be the active tool of monetary policy.	2,022	2	neutral
628	In practice, the Fed operates through a committee structure and considers the recommendations of a variety of monetary rules as we make monetary policy decisions.	2,005	2	neutral
629	In the household sector, the rise in home mortgage debt likely slowed a bit further in the first quarter, as home-price appreciation appeared to have remained sluggish.	2,009	2	neutral
630	Data received over the intermeeting period reinforced earlier indications that real GDP growth had turned up after having been slow in the first quarter of this year.	2,016	2	neutral
632	This action was taken against the backdrop of heightened concerns and uncertainty created by the recent terrorist attacks and their potentially adverse effects on asset prices and the performance of the economy.	2,015	0	dovish
633	A majority of FOMC participants indicated that they expect core inflation to remain below our 2 percent objective and employment to fall short of its maximum level at least through the end of 2022.	2,004	0	dovish
634	The reduced-form price equations we so often use for inflation prediction bypass direct contact with labor compensation issues.	2,007	2	neutral
635	Through our business contacts, we continue to hear stories about bottlenecks at almost every stage of production and distributionâ€”for example, plants that shut down because of a shortage of one or more crucial inputs; a poor cotton crop in the United States due to weather, which is driving up prices; and clogged ports and trucker shortages.	2,007	1	hawkish
636	Stock prices and existing home sales are somewhat correlated, a not altogether unexpected result, because each is affected by interest rates and presumably the gains from each help finance the other.	2,006	2	neutral
637	The distortions in the markets I have reviewed do not appear all that large, given the stance of monetary policy, and should we experience much higher interest rates and softer asset prices our resilient markets and flexible economy probably could absorb such a shock.	2,004	1	hawkish
638	Consumer sentiment was at or close to historically high levels according to recent surveys, evidently reflecting the strong uptrend in employment and income and to some extent the very large cumulative increase in stock market wealth over the course of recent years.	2,014	1	hawkish
639	Members commented that added fiscal stimulus might prove to be a useful complement to an accommodative monetary policy in the period immediately ahead when economic activity was likely to remain below the economy's potential.	2,009	0	dovish
640	Prospects for ProductivityLet me close with some comments on the outlook for productivity.	2,000	2	neutral
641	As a result, consistent with the policy implication of Bill's 1970 model, the Federal Reserve (like most other central banks) today uses the overnight interbank rate as the principal operating target of monetary policy.	2,004	2	neutral
642	During this time of reopening, we are likely to see some upward pressure on prices, and I’ll discuss why.	2,017	0	dovish
643	For now, the Committee should remain particularly vigilant to incoming information bearing on the outlook for inflation.	2,007	2	neutral
644	Without the oil shock, policymakers beginning from a period of low interest rates would try to keep the economy on an even growth path as they gradually raised nominal interest rates.	1,999	1	hawkish
645	For example, households have been able with increasing ease to extract equity from their homes, and this doubtless has helped support consumer spending in recent years, complementing the traditional effects of monetary policy.	2,004	2	neutral
646	Under pure monetary targeting, interest rates would fluctuate with shocks in spending.	2,000	2	neutral
647	The staff viewed the uncertainty around the forecast for economic activity as similar to its normal level over the past 20 years.	2,021	2	neutral
648	However, in this framework, the current period appears to be an outlier.4 That is, even after factoring in the current-cycle dynamics of strong profit growth and relatively modest investment, a good part of the rise in liquid assets remains unaccounted for--as much as one half of the total rise in cash-to-assets--according to Federal Reserve staff estimates.	2,004	2	neutral
649	However, we also believe now is a good time to step back and assess whether, and in what possible ways, we can refine our strategy, tools, and communication practices to achieve and maintain our goals as consistently and robustly as possible.2 With the U.S. economy operating at or close to maximum employment and price stability, now is an especially opportune time to conduct this review.	2,006	2	neutral
650	Some evidence exists that quantitative easing can stimulate the economy even when interest rates are near zero; see, for example, Christina Romer's (1992) discussion of the effects of increases in the money supply during the Great Depression in the United States.	2,017	0	dovish
651	So, as you know, the ultimate focus that we have is on the real economy: maximum employment and price stability.	2,019	2	neutral
652	And, you know, we do want inflation to run moderately above 2 percent.	2,011	0	dovish
653	The explanations included a decline in inflation risk premiums, possibly reflecting a lower perceived probability of higher inflation outcomes	2,009	2	neutral
654	More broadly, signs of a pickup in growth in economic activity in some AFEs and emerging Asian economies other than China also appeared to contribute to the improvement in sentiment in financial markets.	2,018	2	neutral
655	Same thing with economic activity.	2,012	2	neutral
656	Well, if the economy worsens and inflation remains relatively low, then we wouldn’t begin to exit, and, therefore, we wouldn’t change the language.	2,020	0	dovish
657	inflation was projected to pick up gradually in association with a partial reversal of the decline in energy prices this year.	1,996	2	neutral
658	That is, monetary policy responds to changes in fiscal policy in much the same way that it responds to other influences on the economy, such as equity prices, exchange rates, or the demand for U.S. exports due to changed growth prospects abroad.	2,007	2	neutral
659	Central banks generally appear to have embraced a common model of the channels through which monetary policy functions, although the specifics and emphasis given to those channels vary according to our particular circumstances.	1,997	2	neutral
660	I would further say that I think it’s important to emphasize that we’re not going to mechanically take the interest rate projections that participants provide and just build policy off of that.	2,016	2	neutral
661	Moreover, the variance of GDP growth markedly lessened as inflation tumbled from its double-digit high in the early 1980s.	2,006	2	neutral
663	In terms of the, you know, inflation, a couple things—your second question.	2,013	2	neutral
664	On the more positive side, there were no signs that the pace of productivity gains was currently leveling out and no evidence of rising longer-term inflation expectations.	2,001	2	neutral
665	How the forces of demand, potential supply, and expectations interact has probably not been changed in any fundamental way by the recent trend of globalization.	2,007	2	neutral
666	On the one hand, an inverted yield curve could indicate an increased risk of recession; on the other hand, the low level of term premiums in recent years--reflecting, in part, central bank asset purchases--could temper the reliability of the slope of the yield curve as an indicator of future economic activity.	2,001	0	dovish
667	It was possible, though, that investors' uncertainty regarding inflation prospects, not just inflation expectations themselves, had risen.	2,021	1	hawkish
668	How long the favorable factors that continued to stimulate substantial growth in consumer expenditures would persist was uncertain, notably with regard to the outlook for stock market prices and their effects on consumer resources and willingness to spend.	1,996	2	neutral
669	It also requires that policy tighten or ease systematically to bring aggregate demand in line with the economy's productive potential, not only because output stabilization is a policy objective in its own right	2,020	1	hawkish
670	The longer-run projections represent each participant's assessment of the rate to which each variable would be expected to converge, over time, under appropriate monetary policy and in the absence of further shocks to the economy.	2,010	2	neutral
671	Funding of our current account deficit likely will become more difficult when home bias approaches its practical minimum.	2,021	1	hawkish
672	Members cited greater, albeit still occasional, indications of heightened worker demands in labor negotiations that likely were encouraged in part by ample job opportunities.	2,009	1	hawkish
673	But what does this mean for monetary policy?	2,004	2	neutral
674	Members commented that the continued strong increases in energy and other commodity prices would prompt a difficult adjustment process involving both lower growth and higher rates of inflation in the near term.	2,009	2	neutral
675	The risks to the forecast for real GDP growth and inflation were seen as tilted to the downside, reflecting recent financial developments and concerns about the foreign economic outlook, as well as the staff's assessment that neither monetary policy nor fiscal policy appeared well positioned to help the economy withstand adverse shocks.	2,019	0	dovish
676	Wage inflation has been running at 2 percent.	2,021	2	neutral
677	Looking ahead, however, members reiterated earlier concerns that aggregate demand could continue to grow faster than potential aggregate supply, even under optimistic assumptions regarding future productivity gains.	2,019	1	hawkish
678	So I think, through all of those channels, monetary policy works.	2,020	2	neutral
679	For example, the unemployment rate has risen by 0.3 percentage points since March, and new claims for unemployment insurance have moved somewhat higher.	2,021	0	dovish
680	In addition to u* and r*, an important input into any monetary policy assessment is the state of inflation expectations.	2,021	2	neutral
681	Participants also noted that unemployment insurance claims continued to run at a historically elevated level, but the proportion of laid-off workers who expected to be recalled was unusually large.	2,003	0	dovish
682	Projections of the rate of inflation, as measured by the consumer price index, had a central tendency of 1-3/4 to 2-1/4 percent, on the high side of the outcome for 1997 when the rise in the index was held down by damped increases in food prices and declines in energy prices.	2,005	2	neutral
683	The December employment report showed that job growth had slowed appreciably, and other indicators also pointed to emerging weakness in the labor market in the intermeeting period.	2,004	0	dovish
684	we have continued to analyze the effects of changes in interest rates, for example, on decisions like investment or car purchases.	2,022	2	neutral
685	The nominal deficit on U. S. trade in goods and services widened substantially in the second quarter.	2,016	1	hawkish
686	One participant remarked that, with inflation having run consistently below 2 percent in recent years and market-based measures of inflation compensation still low, postponing an increase in the target range for the federal funds rate would help push inflation expectations up to levels consistent with the Committee's objective.	1,999	0	dovish
687	To reduce that uncertainty, we often use the unemployment gap rather than the output gap in these rules.19 We also need to pick values for the coefficients a and b, whether they are the values John Taylor posited in his seminal 1993 article or other values from the vast literature that has come since.20 There are still other choices to make.	2,003	2	neutral
688	In part, the high inflation reflects supply chain disruptions associated with the economic effects of the pandemic and efforts made to contain it.	2,006	1	hawkish
689	With underlying inflation expected to be relatively low, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured.	2,003	1	hawkish
690	However, the volatility of these and other commodity prices is such that possible future increases in these prices remain a risk to the inflation outlook.	2,006	1	hawkish
691	That’s not going to happen without, without restoring price stability.	2,016	1	hawkish
692	Nevertheless, the path of inflation is the biggest risk to my outlook.	1,999	1	hawkish
693	Again, while I do not shirk the responsibility of the Fed having to do what it can to meet its mandate, obviously, a broad range of policies can affect growth and employment, and I hope that there will be a range of actions that will complement and supplement the Federal Reserve’s efforts.	2,019	2	neutral
694	Developments in foreign trade were moderating demands on domestic resources	2,016	0	dovish
696	It was also noted that the weakness in homebuilding along with the continued rise in house prices suggested that supply constraints were also weighing on construction activity.	2,020	1	hawkish
697	But that forecast for growth and uncertainty about the resolution of supply constraints mean that there are upside risks to inflation next year.	1,997	1	hawkish
698	Participants' forecasts for economic growth for 2012 and 2013 were largely unchanged from their January projections and continued to indicate expectations that the recovery will strengthen somewhat over time.	1,999	2	neutral
699	Those factors included the increasing spread of the coronavirus in the United States since mid-June; the reactions of many states and localities in slowing or scaling back the reopening of their economies, especially for businesses, such as restaurants and bars, providing services that entail personal interactions; and some high-frequency indicators that pointed to a deceleration in economic activity.	2,000	0	dovish
700	There are a variety of versions of this basic approach, depending on measures of utilization and inflation rates and depending on whether the adjustment is made in response to past and current movements in utilization and inflation rates or in response to forecasts of these variables.	2,004	2	neutral
701	In contrast to price inflation, labor costs appeared to have remained quiescent.	2,018	2	neutral
702	When long-term rates rise in response to a cyclical strengthening, it reflects, in large part, the expectation of higher short-term interest rates.	1,999	2	neutral
703	First, the expansion of trade may cause domestic inflation to depend to a greater extent on the prices of imported goods--not only because imported goods enter the consumer basket or (in the case of imported intermediate goods) affect the costs of domestic production, but because competition with imports affects the pricing power of domestic producers.	2,001	2	neutral
704	The Committee's accompanying statement indicated that economic growth had been quite strong so far this year.	1,998	1	hawkish
705	You know, monetary policy is a forward-looking exercise, and I’m going to—I’m just going to stick with that.	2,014	2	neutral
706	In contrast, Spanish economic activity stagnated in the third quarter, Greek GDP extended its decline, and more-recent indicators point to continued weakness in peripheral European economies.	2,018	2	neutral
707	The GDP (in real terms, after inflation) has been growing continuously for eight years and this long expansion, instead of petering out, has accelerated in the last couple of years.	2,020	1	hawkish
708	This outcome would be entirely consistent with the new framework the Federal Reserve unanimously adopted in August 2020 and began to implement at our September 2020 Federal Open Market Committee (FOMC) meeting.2 Recent FOMC Decisions and the New Monetary Policy Framework At FOMC meetings convened since the new framework was announced last August, the Committee made important changes to our policy statement that upgraded our forward guidance about the future path of the federal funds rate and asset purchases to bring it in line with our new framework.	2,006	2	neutral
709	Our tools work on demand.	2,012	2	neutral
710	Market-based measures of inflation compensation continued to indicate expectations that inflation would decline notably in coming quarters, and measures of medium-term inflation compensation fell over the intermeeting period.	2,020	2	neutral
711	These policy moves would therefore prevent the far greater economic pain associated with entrenched high inflation, including the even tighter policy and more severe restraint on economic activity that would then be needed to restore price stability.	2,007	1	hawkish
712	My colleagues and I are acutely aware that high inflation imposes significant hardship, especially on those least able to meet the higher costs of essentials like food, housing, and transportation.	2,013	1	hawkish
713	However, we now know that an unexpected and unrecognized slowdown in productivity growth occurred in 1973.	2,003	1	hawkish
714	As keen observers of local economies, the directors here and elsewhere contribute vitally to the formulation of monetary policy by offering important insights absent, by definition, from even the most careful analysis of aggregate data.	2,022	2	neutral
715	In short, rising commodity prices are a better signal of strengthening economic activity than of inflation at the consumer level.	2,021	1	hawkish
716	Operationally, maintaining price stability requires abiding by the Taylor principle of raising nominal interest rates more than one for one in response to movements in inflation, especially those movements perceived as persistent.	2,001	2	neutral
717	On balance, in light of the uncertainties in the outlook and given that a variety of special factors would continue to contain inflation for a time, the Committee could await further developments bearing on the strength of inflationary pressures without incurring a significant risk that disruptive policy actions would be needed later in response to an upturn in inflation and inflation expectations.	2,005	2	neutral
718	But to the extent that continues to be the case, that should make it easier to restore price stability.	2,014	1	hawkish
719	Countries differ in this regard, both in formal mandate and in actual practice.12 As an extensive academic literature shows, however, the general approach of inflation targeting is fully consistent with any set of relative social weights on inflation and unemployment	2,020	2	neutral
720	A couple of participants noted that uncertainties concerning both the level of, and the source of shifts in, potential output made it difficult to base decisions about monetary policy on real-time measures of the output gap.	2,011	2	neutral
721	Looking ahead, some growth in overall consumer spending appeared likely in association with the now more firmly entrenched economic expansion.	2,004	1	hawkish
722	Of course, we can’t do anything about long-run employment opportunities, but we can help the economy recover more quickly.	2,021	0	dovish
723	They remarked that a stronger dollar, weaker demand, and lower oil prices were factors likely to put downward pressure on inflation in the period ahead and observed that this meant that the return of inflation to the Committee's 2 percent longer-run objective would likely be further delayed.	2,015	0	dovish
724	As a result, recent high inflation readings are transitory and not broad based.	2,004	1	hawkish
725	We have a 2 percent symmetric inflation objective, and, for a number of years now, inflation has been running under 2 percent.	2,015	0	dovish
726	With respect to inflation, the netting of the crosscurrents suggests a modest increase in inflation in 1998, albeit from a steadily downward-revised and very low rate in 1997.	2,005	1	hawkish
727	And, in my judgment, we may have to rely more on measures other than apparent excess demand to get reliable indications of pending changes in inflationary pressures.	2,000	2	neutral
728	Estimates by the staff of the Federal Reserve indicate that about 40 percent of the growth in outstanding home mortgage debt during the past five years originated as financing the extraction of home equity.	1,997	1	hawkish
729	A few observed that the combination of recent labor market improvements and continued softness in inflation had led them to lower their estimates of the longer-run normal rate of unemployment.	1,996	2	neutral

627

And then we’ll look to have that just running in the background and have—and have the interest rates, again, be the active tool of monetary policy.

2,022

2

neutral

628

In practice, the Fed operates through a committee structure and considers the recommendations of a variety of monetary rules as we make monetary policy decisions.

2,005

2

neutral

629

In the household sector, the rise in home mortgage debt likely slowed a bit further in the first quarter, as home-price appreciation appeared to have remained sluggish.

2,009

2

neutral

630

Data received over the intermeeting period reinforced earlier indications that real GDP growth had turned up after having been slow in the first quarter of this year.

2,016

2

neutral

632

This action was taken against the backdrop of heightened concerns and uncertainty created by the recent terrorist attacks and their potentially adverse effects on asset prices and the performance of the economy.

2,015

0

dovish

633

A majority of FOMC participants indicated that they expect core inflation to remain below our 2 percent objective and employment to fall short of its maximum level at least through the end of 2022.

2,004

0

dovish

634

The reduced-form price equations we so often use for inflation prediction bypass direct contact with labor compensation issues.

2,007

2

neutral

635

Through our business contacts, we continue to hear stories about bottlenecks at almost every stage of production and distributionâ€”for example, plants that shut down because of a shortage of one or more crucial inputs; a poor cotton crop in the United States due to weather, which is driving up prices; and clogged ports and trucker shortages.

2,007

1

hawkish

636

Stock prices and existing home sales are somewhat correlated, a not altogether unexpected result, because each is affected by interest rates and presumably the gains from each help finance the other.

2,006

2

neutral

637

The distortions in the markets I have reviewed do not appear all that large, given the stance of monetary policy, and should we experience much higher interest rates and softer asset prices our resilient markets and flexible economy probably could absorb such a shock.

2,004

1

hawkish

638

Consumer sentiment was at or close to historically high levels according to recent surveys, evidently reflecting the strong uptrend in employment and income and to some extent the very large cumulative increase in stock market wealth over the course of recent years.

2,014

1

hawkish

639

Members commented that added fiscal stimulus might prove to be a useful complement to an accommodative monetary policy in the period immediately ahead when economic activity was likely to remain below the economy's potential.

2,009

0

dovish

640

Prospects for ProductivityLet me close with some comments on the outlook for productivity.

2,000

2

neutral

641

As a result, consistent with the policy implication of Bill's 1970 model, the Federal Reserve (like most other central banks) today uses the overnight interbank rate as the principal operating target of monetary policy.

2,004

2

neutral

642

During this time of reopening, we are likely to see some upward pressure on prices, and I’ll discuss why.

2,017

0

dovish

643

For now, the Committee should remain particularly vigilant to incoming information bearing on the outlook for inflation.

2,007

2

neutral

644

Without the oil shock, policymakers beginning from a period of low interest rates would try to keep the economy on an even growth path as they gradually raised nominal interest rates.

1,999

1

hawkish

645

For example, households have been able with increasing ease to extract equity from their homes, and this doubtless has helped support consumer spending in recent years, complementing the traditional effects of monetary policy.

2,004

2

neutral

646

Under pure monetary targeting, interest rates would fluctuate with shocks in spending.

2,000

2

neutral

647

The staff viewed the uncertainty around the forecast for economic activity as similar to its normal level over the past 20 years.

2,021

2

neutral

648

However, in this framework, the current period appears to be an outlier.4 That is, even after factoring in the current-cycle dynamics of strong profit growth and relatively modest investment, a good part of the rise in liquid assets remains unaccounted for--as much as one half of the total rise in cash-to-assets--according to Federal Reserve staff estimates.

2,004

2

neutral

649

However, we also believe now is a good time to step back and assess whether, and in what possible ways, we can refine our strategy, tools, and communication practices to achieve and maintain our goals as consistently and robustly as possible.2 With the U.S. economy operating at or close to maximum employment and price stability, now is an especially opportune time to conduct this review.

2,006

2

neutral

650

Some evidence exists that quantitative easing can stimulate the economy even when interest rates are near zero; see, for example, Christina Romer's (1992) discussion of the effects of increases in the money supply during the Great Depression in the United States.

2,017

0

dovish

651

So, as you know, the ultimate focus that we have is on the real economy: maximum employment and price stability.

2,019

2

neutral

652

And, you know, we do want inflation to run moderately above 2 percent.

2,011

0

dovish

653

The explanations included a decline in inflation risk premiums, possibly reflecting a lower perceived probability of higher inflation outcomes

2,009

2

neutral

654

More broadly, signs of a pickup in growth in economic activity in some AFEs and emerging Asian economies other than China also appeared to contribute to the improvement in sentiment in financial markets.

2,018

2

neutral

655

Same thing with economic activity.

2,012

2

neutral

656

Well, if the economy worsens and inflation remains relatively low, then we wouldn’t begin to exit, and, therefore, we wouldn’t change the language.

2,020

0

dovish

657

inflation was projected to pick up gradually in association with a partial reversal of the decline in energy prices this year.

1,996

2

neutral

658

That is, monetary policy responds to changes in fiscal policy in much the same way that it responds to other influences on the economy, such as equity prices, exchange rates, or the demand for U.S. exports due to changed growth prospects abroad.

2,007

2

neutral

659

Central banks generally appear to have embraced a common model of the channels through which monetary policy functions, although the specifics and emphasis given to those channels vary according to our particular circumstances.

1,997

2

neutral

660

I would further say that I think it’s important to emphasize that we’re not going to mechanically take the interest rate projections that participants provide and just build policy off of that.

2,016

2

neutral

661

Moreover, the variance of GDP growth markedly lessened as inflation tumbled from its double-digit high in the early 1980s.

2,006

2

neutral

663

In terms of the, you know, inflation, a couple things—your second question.

2,013

2

neutral

664

On the more positive side, there were no signs that the pace of productivity gains was currently leveling out and no evidence of rising longer-term inflation expectations.

2,001

2

neutral

665

How the forces of demand, potential supply, and expectations interact has probably not been changed in any fundamental way by the recent trend of globalization.

2,007

2

neutral

666

On the one hand, an inverted yield curve could indicate an increased risk of recession; on the other hand, the low level of term premiums in recent years--reflecting, in part, central bank asset purchases--could temper the reliability of the slope of the yield curve as an indicator of future economic activity.

2,001

0

dovish

667

It was possible, though, that investors' uncertainty regarding inflation prospects, not just inflation expectations themselves, had risen.

2,021

1

hawkish

668

How long the favorable factors that continued to stimulate substantial growth in consumer expenditures would persist was uncertain, notably with regard to the outlook for stock market prices and their effects on consumer resources and willingness to spend.

1,996

2

neutral

669

It also requires that policy tighten or ease systematically to bring aggregate demand in line with the economy's productive potential, not only because output stabilization is a policy objective in its own right

2,020

1

hawkish

670

The longer-run projections represent each participant's assessment of the rate to which each variable would be expected to converge, over time, under appropriate monetary policy and in the absence of further shocks to the economy.

2,010

2

neutral

671

Funding of our current account deficit likely will become more difficult when home bias approaches its practical minimum.

2,021

1

hawkish

672

Members cited greater, albeit still occasional, indications of heightened worker demands in labor negotiations that likely were encouraged in part by ample job opportunities.

2,009

1

hawkish

673

But what does this mean for monetary policy?

2,004

2

neutral

674

Members commented that the continued strong increases in energy and other commodity prices would prompt a difficult adjustment process involving both lower growth and higher rates of inflation in the near term.

2,009

2

neutral

675

The risks to the forecast for real GDP growth and inflation were seen as tilted to the downside, reflecting recent financial developments and concerns about the foreign economic outlook, as well as the staff's assessment that neither monetary policy nor fiscal policy appeared well positioned to help the economy withstand adverse shocks.

2,019

0

dovish

676

Wage inflation has been running at 2 percent.

2,021

2

neutral

677

Looking ahead, however, members reiterated earlier concerns that aggregate demand could continue to grow faster than potential aggregate supply, even under optimistic assumptions regarding future productivity gains.

2,019

1

hawkish

678

So I think, through all of those channels, monetary policy works.

2,020

2

neutral

679

For example, the unemployment rate has risen by 0.3 percentage points since March, and new claims for unemployment insurance have moved somewhat higher.

2,021

0

dovish

680

In addition to u* and r*, an important input into any monetary policy assessment is the state of inflation expectations.

2,021

2

neutral

681

Participants also noted that unemployment insurance claims continued to run at a historically elevated level, but the proportion of laid-off workers who expected to be recalled was unusually large.

2,003

0

dovish

682

Projections of the rate of inflation, as measured by the consumer price index, had a central tendency of 1-3/4 to 2-1/4 percent, on the high side of the outcome for 1997 when the rise in the index was held down by damped increases in food prices and declines in energy prices.

2,005

2

neutral

683

The December employment report showed that job growth had slowed appreciably, and other indicators also pointed to emerging weakness in the labor market in the intermeeting period.

2,004

0

dovish

684

we have continued to analyze the effects of changes in interest rates, for example, on decisions like investment or car purchases.

2,022

2

neutral

685

The nominal deficit on U. S. trade in goods and services widened substantially in the second quarter.

2,016

1

hawkish

686

One participant remarked that, with inflation having run consistently below 2 percent in recent years and market-based measures of inflation compensation still low, postponing an increase in the target range for the federal funds rate would help push inflation expectations up to levels consistent with the Committee's objective.

1,999

0

dovish

687

To reduce that uncertainty, we often use the unemployment gap rather than the output gap in these rules.19 We also need to pick values for the coefficients a and b, whether they are the values John Taylor posited in his seminal 1993 article or other values from the vast literature that has come since.20 There are still other choices to make.

2,003

2

neutral

688

In part, the high inflation reflects supply chain disruptions associated with the economic effects of the pandemic and efforts made to contain it.

2,006

1

hawkish

689

With underlying inflation expected to be relatively low, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured.

2,003

1

hawkish

690

However, the volatility of these and other commodity prices is such that possible future increases in these prices remain a risk to the inflation outlook.

2,006

1

hawkish

691

That’s not going to happen without, without restoring price stability.

2,016

1

hawkish

692

Nevertheless, the path of inflation is the biggest risk to my outlook.

1,999

1

hawkish

693

Again, while I do not shirk the responsibility of the Fed having to do what it can to meet its mandate, obviously, a broad range of policies can affect growth and employment, and I hope that there will be a range of actions that will complement and supplement the Federal Reserve’s efforts.

2,019

2

neutral

694

Developments in foreign trade were moderating demands on domestic resources

2,016

0

dovish

696

It was also noted that the weakness in homebuilding along with the continued rise in house prices suggested that supply constraints were also weighing on construction activity.

2,020

1

hawkish

697

But that forecast for growth and uncertainty about the resolution of supply constraints mean that there are upside risks to inflation next year.

1,997

1

hawkish

698

Participants' forecasts for economic growth for 2012 and 2013 were largely unchanged from their January projections and continued to indicate expectations that the recovery will strengthen somewhat over time.

1,999

2

neutral

699

Those factors included the increasing spread of the coronavirus in the United States since mid-June; the reactions of many states and localities in slowing or scaling back the reopening of their economies, especially for businesses, such as restaurants and bars, providing services that entail personal interactions; and some high-frequency indicators that pointed to a deceleration in economic activity.

2,000

0

dovish

700

There are a variety of versions of this basic approach, depending on measures of utilization and inflation rates and depending on whether the adjustment is made in response to past and current movements in utilization and inflation rates or in response to forecasts of these variables.

2,004

2

neutral

701

In contrast to price inflation, labor costs appeared to have remained quiescent.

2,018

2

neutral

702

When long-term rates rise in response to a cyclical strengthening, it reflects, in large part, the expectation of higher short-term interest rates.

1,999

2

neutral

703

First, the expansion of trade may cause domestic inflation to depend to a greater extent on the prices of imported goods--not only because imported goods enter the consumer basket or (in the case of imported intermediate goods) affect the costs of domestic production, but because competition with imports affects the pricing power of domestic producers.

2,001

2

neutral

704

The Committee's accompanying statement indicated that economic growth had been quite strong so far this year.

1,998

1

hawkish

705

You know, monetary policy is a forward-looking exercise, and I’m going to—I’m just going to stick with that.

2,014

2

neutral

706

In contrast, Spanish economic activity stagnated in the third quarter, Greek GDP extended its decline, and more-recent indicators point to continued weakness in peripheral European economies.

2,018

2

neutral

707

The GDP (in real terms, after inflation) has been growing continuously for eight years and this long expansion, instead of petering out, has accelerated in the last couple of years.

2,020

1

hawkish

708

This outcome would be entirely consistent with the new framework the Federal Reserve unanimously adopted in August 2020 and began to implement at our September 2020 Federal Open Market Committee (FOMC) meeting.2 Recent FOMC Decisions and the New Monetary Policy Framework At FOMC meetings convened since the new framework was announced last August, the Committee made important changes to our policy statement that upgraded our forward guidance about the future path of the federal funds rate and asset purchases to bring it in line with our new framework.

2,006

2

neutral

709

Our tools work on demand.

2,012

2

neutral

710

Market-based measures of inflation compensation continued to indicate expectations that inflation would decline notably in coming quarters, and measures of medium-term inflation compensation fell over the intermeeting period.

2,020

2

neutral

711

These policy moves would therefore prevent the far greater economic pain associated with entrenched high inflation, including the even tighter policy and more severe restraint on economic activity that would then be needed to restore price stability.

2,007

1

hawkish

712

My colleagues and I are acutely aware that high inflation imposes significant hardship, especially on those least able to meet the higher costs of essentials like food, housing, and transportation.

2,013

1

hawkish

713

However, we now know that an unexpected and unrecognized slowdown in productivity growth occurred in 1973.

2,003

1

hawkish

714

As keen observers of local economies, the directors here and elsewhere contribute vitally to the formulation of monetary policy by offering important insights absent, by definition, from even the most careful analysis of aggregate data.

2,022

2

neutral

715

In short, rising commodity prices are a better signal of strengthening economic activity than of inflation at the consumer level.

2,021

1

hawkish

716

Operationally, maintaining price stability requires abiding by the Taylor principle of raising nominal interest rates more than one for one in response to movements in inflation, especially those movements perceived as persistent.

2,001

2

neutral

717

On balance, in light of the uncertainties in the outlook and given that a variety of special factors would continue to contain inflation for a time, the Committee could await further developments bearing on the strength of inflationary pressures without incurring a significant risk that disruptive policy actions would be needed later in response to an upturn in inflation and inflation expectations.

2,005

2

neutral

718

But to the extent that continues to be the case, that should make it easier to restore price stability.

2,014

1

hawkish

719

Countries differ in this regard, both in formal mandate and in actual practice.12 As an extensive academic literature shows, however, the general approach of inflation targeting is fully consistent with any set of relative social weights on inflation and unemployment

2,020

2

neutral

720

A couple of participants noted that uncertainties concerning both the level of, and the source of shifts in, potential output made it difficult to base decisions about monetary policy on real-time measures of the output gap.

2,011

2

neutral

721

Looking ahead, some growth in overall consumer spending appeared likely in association with the now more firmly entrenched economic expansion.

2,004

1

hawkish

722

Of course, we can’t do anything about long-run employment opportunities, but we can help the economy recover more quickly.

2,021

0

dovish

723

They remarked that a stronger dollar, weaker demand, and lower oil prices were factors likely to put downward pressure on inflation in the period ahead and observed that this meant that the return of inflation to the Committee's 2 percent longer-run objective would likely be further delayed.

2,015

0

dovish

724

As a result, recent high inflation readings are transitory and not broad based.

2,004

1

hawkish

725

We have a 2 percent symmetric inflation objective, and, for a number of years now, inflation has been running under 2 percent.

2,015

0

dovish

726

With respect to inflation, the netting of the crosscurrents suggests a modest increase in inflation in 1998, albeit from a steadily downward-revised and very low rate in 1997.

2,005

1

hawkish

727

And, in my judgment, we may have to rely more on measures other than apparent excess demand to get reliable indications of pending changes in inflationary pressures.

2,000

2

neutral

728

Estimates by the staff of the Federal Reserve indicate that about 40 percent of the growth in outstanding home mortgage debt during the past five years originated as financing the extraction of home equity.

1,997

1

hawkish

729

A few observed that the combination of recent labor market improvements and continued softness in inflation had led them to lower their estimates of the longer-run normal rate of unemployment.

1,996

2

neutral