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MNI BRIEF: UK Borrowing, Debt On Downward Path - OBR Forecasts

MNI China Daily Summary: Wednesday, Nov 22

(RPT)MNI INTERVIEW:Spending Remains Too Hot For BOC-Ex Adviser

EZ/UK Bond Supply Calendar: EU-Bond Auct / BOE APF Op Monday

EZ/UK T-Bill Calendar: 1/3/6-Month UKTB Auction on Friday

US EIA: CRUDE OIL STOCKS EX SPR +8.7M TO 448.1M NOV 17 WK

MNI BRIEF: Lawmakers Signal Tough Hearing For BOC's Macklem

MNI BRIEF:Macklem-Fiscal Policy Turning Unhelpful On CPI Fight

MNI BRIEF: Stabilizing Prices Helps BOC Turn Neutral-Freeland

FOMC Not Considering Changing Pace of Balance Sheet Runoff

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  • Q: You said you need "slower" growth, you used to say "below potential" growth, has that changed? Are you saying all meetings are live, is each meeting going to be a subjective judgment?
    • A: The Dot Plot is a picture in time - when things change, the forecast could change. The efficacy of the Dot Plot probably decays in the 3 month period between meetings. We personally update the forecast but we don't formally update the Dot Plot.
    • Potential growth has been elevated for a year or two over its trend level. People think trend is around 2%. But we've had an improvement in the size of the labor force, with potential growth rising in a catch-up growth. That means you could still be growing 2% this year and still be growing below the increase in the potential output of the economy - that's why I say it is below potential.
    • We're going meeting by meeting, we're asking ourselves whether policy is sufficiently restrictive.
  • Q: Have you considered changing QT program in light of higher long-end yields?
    • A: The FOMC is not considering changing the pace of balance sheet runoff. I know there are many possible explanations for why rates have been going up, and QT is certainly on that list, it may be playing a small role. At $3.3T, hard to make a case that reserves are even close to scarce.
  • Q: Could you expect finalizing the Basel 3 endgame capital proposal without significant changes?
    • A: We are a consensus driven organization, we will come to a package that has broad support on the board.
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  • Q: You said you need "slower" growth, you used to say "below potential" growth, has that changed? Are you saying all meetings are live, is each meeting going to be a subjective judgment?
    • A: The Dot Plot is a picture in time - when things change, the forecast could change. The efficacy of the Dot Plot probably decays in the 3 month period between meetings. We personally update the forecast but we don't formally update the Dot Plot.
    • Potential growth has been elevated for a year or two over its trend level. People think trend is around 2%. But we've had an improvement in the size of the labor force, with potential growth rising in a catch-up growth. That means you could still be growing 2% this year and still be growing below the increase in the potential output of the economy - that's why I say it is below potential.
    • We're going meeting by meeting, we're asking ourselves whether policy is sufficiently restrictive.
  • Q: Have you considered changing QT program in light of higher long-end yields?
    • A: The FOMC is not considering changing the pace of balance sheet runoff. I know there are many possible explanations for why rates have been going up, and QT is certainly on that list, it may be playing a small role. At $3.3T, hard to make a case that reserves are even close to scarce.
  • Q: Could you expect finalizing the Basel 3 endgame capital proposal without significant changes?
    • A: We are a consensus driven organization, we will come to a package that has broad support on the board.