Forward Guidance from the Fed

It would seem to me that the increase of transparency at the Federal Reserve has made Fed-watching harder rather than easier. In no particular order, here are recent statements from various Fed officials.

Charles Plosser, WSJ, May 29:

The U.S. Federal Reserve is well equipped to deal with any fallout from Europe’s escalating debt crisis, a top official said.

“There’s absolutely no reason for people in the United States to get all in a dither,” Federal Reserve Bank of Philadelphia President Charles Plosser said in an interview with The Wall Street Journal.

[…]

“I think we have the tools at our disposal if they become necessary,” he said.

Despite the uncertainty emanating from Europe, Mr. Plosser expects U.S. gross domestic product to expand by 2.5% to 3% this year and next, and the unemployment rate to drift gradually lower. Against that backdrop, central-bank interest rates would need to rise, he said.

“As long as that’s continuing, then I don’t see the case for [an] ever-increasing degree of accommodation,” he said.

Narayana Kocherlakota, June 7:

“Inflation was distinctly higher in 2011 than in 2010,” and even core inflation went up, the central banker said. “I see these changes as a signal that our country’s current labor market performance is closer to ‘maximum employment,’ given the tools available to the FOMC, Kocherlakota said.

“As I’ve argued in the past, appropriate monetary policy should be responsive to such signals,” the official said, in comments that appeared to suggest a limited appetite, if any, for more monetary-policy stimulus, despite a historically high unemployment rate.

Charles Evans, June 5:

Charles Evans, president of the Chicago Federal Reserve Bank, speaking just days after a government report showed paltry U.S. jobs growth in May, warned that the economy could suffer long-term consequences if the Fed does not act now.

“With huge resource gaps, slow growth and low inflation, the economic circumstances warrant extremely strong accommodation,” Evans said in remarks prepared for delivery to the Money Marketeers of New York University.

James Bullard, May 17:

“Generally speaking, the U.S. economy has done better than expected in the first part of 2012,” Bullard said today in Louisville, Kentucky. “My own forecast has rates going up a little sooner” than other central bankers, or “late 2013.”

Janet Yellen, June 6:

“I believe that a highly accommodative (Fed) policy will be needed for quite some time to help the economy mend,” Janet Yellen, vice chair of the Federal Reserve board of governors, said this evening in remarks to the Boston Economic Club. “I anticipate that significant headwinds will continue to restrain the pace of the recovery.”

Ben Bernanke, June 7:

Federal Reserve Chairman Ben Bernanke cited significant risks to the U.S. economic recovery but stopped short of signaling Fed action to combat them, during testimony on Capitol Hill Thursday.

When asked whether the Fed is planning to take more measures to boost growth, Mr. Bernanke said he and his colleagues “are still working” on that question ahead of their June 19-20 meeting. The main question they need to answer, he said, is whether the economy will be strong enough to make material progress on bringing down unemployment.

“We have a number of different options” for action if they decide to move, he told Congress’s Joint Economic Committee. “At this point I really can’t say anything is off the table.”