Business Incorporated: Dovish Fed Chief Vs Hawkish FOMC Members

Will Fed Chair Jerome Powell's tone on Wednesday be hawkish or dovish?

Bullard began his career as an academic economist and monetary policy scholar. Louis in as an economist in the research division.

Bullard began his career as an academic economist and monetary policy scholar. Louis in as an economist in the research division. Prior to becoming president, Bullard was vice president and deputy director of research for monetary analysis at the Federal Reserve Bank of St.

8 Aug On Monday, St. Louis Federal Reserve President James...

Louis Federal Reserve Bank on April 1, Louis and branches in Little Rock, Ark. Other at Washington University in St. Louis , where he also sits on the advisory council of the economics department and the Wells Fargo Advisors Center for Finance and Accounting Research. Louis Chancellor's Council, the St. Louis Fed's near-term U. The new approach is based on the idea that the economy may experience one of several possible persistent regimes, which involve a combination of recession or no recession, high or low productivity growth, and high or low real returns on short-term government debt.

While switches between regimes are possible, they are difficult to forecast. This contrasts with the more traditional approach to monetary policy projections, which assumes that the economy will converge to one single, long-run steady state.

Given that the cyclical dynamics that resulted from the recession appeared to be over, Bullard said: We needed to rethink our approach to forecasting. Lost Decade Japan In November , Bullard opined that the central bank should extend its mortgage-backed securities buying program beyond its expiration date in March , which would according to the New York Times keep interest rates low and help keep the dollar weak.

During the summer of , Bullard warned that the U. Plosser , then-president of the Philadelphia Fed ; Richard W. Fisher , then-president of the Dallas Fed ; and Thomas M. Hoenig , then-president of the Kansas City Fed. Meyer , a former Fed governor, said Bullard's new position was "very significant He has been one of the most hawkish members. Rosengren , Boston Fed ; Janet L. Dudley , New York Fed. Quantitative Easing The Federal Reserve engaged in two large-scale asset purchase programs between and , commonly referred to as the first and second rounds of quantitative easing, or QE1 and QE2.

Both programs had detractors, including those who likened the policy to "printing money. Bullard and other Fed policymakers may be convinced that they have a powerful new tool at their disposal, but they still need to persuade the public that it works. Rather, he has stated he favors a "state-contingent" policy path similar to how the FOMC adjusts the federal funds rate on a meeting-by-meeting basis: He called the central bank's balance sheet policy "the most natural and effective tool for this purpose.

According to Reuters, "Bullard and Fisher do not represent the consensus view championed by Fed Chairman Ben Bernanke, who has strongly hinted at the possibility of further action. But they do remind investors that the central bank will not be united if it decides to delve even further into the realm of unconventional monetary policy.

Bullard, who was not a voting member of the FOMC at that time, told financial media that he would have voted against QE3: I didn't feel like we had a good enough case to make a major move at this juncture," Bullard told Reuters.

He said the committee "should have more strongly signaled its willingness to defend its inflation target of 2 percent in light of recent low inflation readings. Inflation Bullard has argued that the Fed should focus on headline inflation and de-emphasize core inflation , which has been a long-standing issue for the FOMC. In a May speech to the Money Marketeers Club in New York City, Bullard said that, "Many of the old arguments in favor of a focus on core inflation have become rotten over the years.

It is time to drop the emphasis on core inflation as a meaningful way to interpret the inflation process in the U. This is damaging Fed credibility in Main Street America. Louis Fed president has stated that inflation targeting is the modern successor to the commodity standard and is the better choice in the current environment. While a commodity standard forces some accountability on the central bank, in the past "it did not always work because governments sometimes changed the rate between the commodity and the currency," Bullard said.

Inflation targeting also forces more accountability to the central bank and anchors longer-term inflation expectations. He said that with inflation targeting, the central bank would have to specify its goal with respect to inflation and would be held accountable for achieving that goal. Federal Reserve System Since the beginning of the financial crisis in , criticism of the Federal Reserve has become more prominent.

Some argued that the Republican victories in the midterm elections made ending the Fed more likely, while others, such as former Senator Chris Dodd D- CT and Senator Richard Shelby R- AL , contended that the reforms introduced in the Dodd-Frank Act would strengthen the Fed by narrowing its focus to traditional responsibilities.

He has also argued that "The Fed should remain involved with community bank regulation so that it has a view of the entire financial landscape. Countries lacking an independent central bank may have poorer economic outcomes e. Bullard has suggested that the best way to achieve both parts of the mandate is by pursuing low and stable inflation.

He argues its benefit "could be improved communication with financial markets and the American public about how the FOMC views the key issues facing the U. He argues that only holding conferences after specific meetings gives those meetings a perceived added importance.

He also added, "I want the committee to have a press conference at every meeting, so that every meeting looks, ex ante, identical. And this would give the committee the freedom to make a move or not make a move at a particular meeting. This could be a looming disaster for the United States," he said. She holds a master's degree in public administration from Indiana University.

The couple has two daughters and resides in the St.

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