skip to Main Content

Comment: Word from dissenters states their reasoning, but it will take time to discern the wider FOMC consensus

The communications blackout period around the September 17-18 FOMC meeting concluded as of midnight on Thursday, September 19. Friday morning frees up policymakers to offer their views about rates and the economy again.

As has become fairly standard practice, a couple of the voters who dissented provided a more detailed explanation of their reasons.

After the July 31 FOMC meeting and her dissent in the vote, Kansas City Fed President Esther George issued an explanation on August 2. She has not as yet issued a fresh one after a second dissent in the vote of the September 17-18 meeting, probably because her reasoning is unchanged and the only change would be that the fed funds rate range was lowered to 1.75%-2.00% from the 2.00%-2.25% in the earlier comment.

Boston Fed President Eric Rosengren offered a statement on September 20 following up on his dissent in the FOMC vote this week, presenting his reasoning that, “While risks clearly exist related to trade and geopolitical concerns, lowering rates to address uncertainty is not costless”. He also issued a statement on August 2 after his dissent on July 31 that given conditions then, he did “not see a clear and compelling case for additional monetary policy”. Rosengren will get another opportunity to talk about his dissent in an appearance later on Friday morning at 11:20 ET.

St. Louis Fed President James Bullard released a statement on September 20 listing his concerns about anticipation of slower growth, and that inflation continues to run below the 2% objective. He said, “I believe that lowering the target range for the federal funds rate by 50 basis points at this time would provide insurance against further declines in expected inflation and a slowing economy subject to elevated downside risks.” Bullard also dissented in the vote after the June 18-19 meeting preferring that the fed funds rate be lowered by 25 basis points at the time. He issued an explanation for his dissent on Friday, June 21.

There will be opportunities to hear from other policymakers – voters and nonvoters – about the appropriate path for monetary policy. Markets will be anxious to assess if the consensus on the FOMC is alert to the possibility that the data will change enough to counsel further rate cuts in 2019 and/or an accelerated pace of providing additional accommodation in 2020. There are a number of scheduled speeches today and next week, but a number of these appearances could be repeats and not advance the conversation.

New York Fed President John Williams (moderate, voter) at the US Treasury Market Conference in New York on Monday, September 23. He is scheduled to give welcoming remarks at 9:45 ET. These are likely to be boilerplate about the purpose of the conference. However, it would not be surprising if there was a meeting with reporters before or after.

St. Louis Fed President James Bullard (dove, voter) always gets a hearing and his recent advocation for greater interest rate accommodation will add to the interest. He is speaking on Monday at 13:00 ET on “US Economy and Monetary Policy” and on Thursday, September 26 at 10:00 ET on “Banking and the Economy: A Forum for Minorities in Banking”.

San Francisco Fed President Mary Daly (moderate, nonvoter) will speak about “Supporting Economic Opportunity in America’s Urban and Rural Communities” at 14:30 ET on Monday.

Chicago Fed President Charles Evans (dove, voter) will speak at 8:00 ET on Wednesday about the economic outlook and monetary policy. It is interesting that Evans, a true inflation dove, has not joined with Bullard in preferring lower rates to support getting back toward the 2% inflation objective. It may be that the strength in the labor market is enough for balanced policy.

Dallas Fed President Robert Kaplan (moderate, voter in 2020) is on the calendar for Friday, September 20 at 13:00 and Wednesday, September 25 at 7:00 ET for a moderated discussion period, and on Thursday at 9:30 to give welcoming remarks at a trade and immigration conference. Kaplan is generous with his press availability and is likely to be in the news on both occasions.

Philadelphia Fed President Patrick Harker (moderate, voter in 2020) will speak about the economic outlook at the Shadow Open Market Committee fall meeting on Friday, September 27 at 12:00 ET.

Markets are likely to be disappointed to learn that the centrists on the FOMC are reluctant to lower rates too much or too quickly, and will do so only in the context of the dual mandate. Most evidence is pointing to a labor market that is healthy and well able to absorb new workers and bring in some from the margins, and inflation starting to nudge back toward objection. As such, the argument for adding back in some accommodation rests with the risks to the outlook which many may not find decisive.

The communications blackout period around the September 17-18 FOMC meeting concluded as of midnight on Thursday, September 19. Friday morning frees up policymakers to offer their views about rates and the economy again.

As has become fairly standard practice, a couple of the voters who dissented provided a more detailed explanation of their reasons.

After the July 31 FOMC meeting and her dissent in the vote, Kansas City Fed President Esther George issued an explanation on August 2. She has not as yet issued a fresh one after a second dissent in the vote of the September 17-18 meeting, probably because her reasoning is unchanged and the only change would be that the fed funds rate range was lowered to 1.75%-2.00% from the 2.00%-2.25% in the earlier comment.

Boston Fed President Eric Rosengren offered a statement on September 20 following up on his dissent in the FOMC vote this week, presenting his reasoning that, “While risks clearly exist related to trade and geopolitical concerns, lowering rates to address uncertainty is not costless”. He also issued a statement on August 2 after his dissent on July 31 that given conditions then, he did “not see a clear and compelling case for additional monetary policy”. Rosengren will get another opportunity to talk about his dissent in an appearance later on Friday morning at 11:20 ET.

St. Louis Fed President James Bullard released a statement on September 20 listing his concerns about anticipation of slower growth, and that inflation continues to run below the 2% objective. He said, “I believe that lowering the target range for the federal funds rate by 50 basis points at this time would provide insurance against further declines in expected inflation and a slowing economy subject to elevated downside risks.” Bullard also dissented in the vote after the June 18-19 meeting preferring that the fed funds rate be lowered by 25 basis points at the time. He issued an explanation for his dissent on Friday, June 21.

There will be opportunities to hear from other policymakers – voters and nonvoters – about the appropriate path for monetary policy. Markets will be anxious to assess if the consensus on the FOMC is alert to the possibility that the data will change enough to counsel further rate cuts in 2019 and/or an accelerated pace of providing additional accommodation in 2020. There are a number of scheduled speeches today and next week, but a number of these appearances could be repeats and not advance the conversation.

New York Fed President John Williams (moderate, voter) at the US Treasury Market Conference in New York on Monday, September 23. He is scheduled to give welcoming remarks at 9:45 ET. These are likely to be boilerplate about the purpose of the conference. However, it would not be surprising if there was a meeting with reporters before or after.

St. Louis Fed President James Bullard (dove, voter) always gets a hearing and his recent advocation for greater interest rate accommodation will add to the interest. He is speaking on Monday at 13:00 ET on “US Economy and Monetary Policy” and on Thursday, September 26 at 10:00 ET on “Banking and the Economy: A Forum for Minorities in Banking”.

San Francisco Fed President Mary Daly (moderate, nonvoter) will speak about “Supporting Economic Opportunity in America’s Urban and Rural Communities” at 14:30 ET on Monday.

Chicago Fed President Charles Evans (dove, voter) will speak at 8:00 ET on Wednesday about the economic outlook and monetary policy. It is interesting that Evans, a true inflation dove, has not joined with Bullard in preferring lower rates to support getting back toward the 2% inflation objective. It may be that the strength in the labor market is enough for balanced policy.

Dallas Fed President Robert Kaplan (moderate, voter in 2020) is on the calendar for Friday, September 20 at 13:00 and Wednesday, September 25 at 7:00 ET for a moderated discussion period, and on Thursday at 9:30 to give welcoming remarks at a trade and immigration conference. Kaplan is generous with his press availability and is likely to be in the news on both occasions.

Philadelphia Fed President Patrick Harker (moderate, voter in 2020) will speak about the economic outlook at the Shadow Open Market Committee fall meeting on Friday, September 27 at 12:00 ET.

Markets are likely to be disappointed to learn that the centrists on the FOMC are reluctant to lower rates too much or too quickly, and will do so only in the context of the dual mandate. Most evidence is pointing to a labor market that is healthy and well able to absorb new workers and bring in some from the margins, and inflation starting to nudge back toward objection. As such, the argument for adding back in some accommodation rests with the risks to the outlook which many may not find decisive.

Back To Top