Posts Tagged ‘ inflation models ’

Yellen Fed & Monetary Policy: “Running it Hot”

September 24, 2016
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Yellen Fed & Monetary Policy: “Running it Hot”

The September Fed meeting issued few surprises; fed funds were not hiked, as was telegraphed by the Brainard speech. While the Fed maintained interest rates, in the press conference, Yellen once again, found a way to interject incremental dovishness, driving interest rates lower, and asset prices up. The playbook of the Yellen Fed for the past 3-years continues. The new focus of the Fed revolves around finally acknowledging that the Philips Curve is a rubbish inflation model, and that more slack exists in the labor market, and the economy, than previously believed, hindering an acceleration in inflation pressures. Cynics will observe that this new found slack wasn’t focused on by hawkish Fed Governors, up until September 10th, when talk of two hikes this year were still be floated. The...

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