MNI: Fed Speak: Comments From FOMC Members on Rates, Inflation

     WASHINGTON (MNI) - The following is a summary of significant policy

comments from members of the Federal Reserve's policymaking Federal Open Market

Committee since their last meeting Sept. 19-20.

     NOTE: * denotes member is an FOMC voter in 2017. ** denotes comments made

exclusively to MNI.

     INTEREST RATES

     Loretta Mester (Cleveland): "My forecast for the economy would suggest that

we need an upwardly-tilted funds rate path," and my forecast is "probably a

little stronger than the median path." (Oct. 20)

     John Williams (San Francisco): "My own view is we want to continue this

gradual pace of increase. One more rate increase in December and three more next

year is a pretty good starting point." (Oct. 17)

     Janet Yellen (Chair*): "We continue to expect that the ongoing strength of

the economy will warrant gradual increases in that rate to sustain a healthy

labor market and stabilize inflation around our 2% longer-run objective." (Oct.

15)

     Eric Rosengren (Boston**): "One (rate increase) every quarter seems pretty

reasonable unless inflation data ends up being weaker than I'm anticipating."

(Oct. 14) 

     Robert Kaplan (Dallas*): "I believe the Fed should be patient and gradual

in removing accommodation." (Oct. 13)

     Raphael Bostic (Atlanta): "I haven't seen things that suggest that we

should move off of that (2017 SEP median) forecast, but I do understand that

there are some areas of uncertainty." (Oct. 13)

     James Bullard (St. Louis): "My guess is, if the data comes in as expected,

it would be appropriate to raise rates in December." (Oct. 12)

     Jerome Powell (Governor*): Policy normalization "has been and should

continue to be gradual," as long as the U.S. economy evolves roughly as

expected. (Oct. 12)

     Charles Evans (Chicago*): "There's room for a very honest discussion later

this year as to whether or not it's the right time to raise rates. I really

don't see any harm in waiting longer to take more stock of the inflation

situation." (Oct. 11)

     Esther George (Kansas City): "Waiting for solid evidence that inflation

will reach 2% before taking further steps to remove accommodation carries risks

of overheating the economy, fostering financial instability, and perhaps putting

in motion an undesirable increase in inflation. (Oct. 11)

     William Dudley (New York*): "Even though inflation is currently somewhat

below our longer-run objective, I judge that it is still appropriate to continue

to remove monetary policy accommodation gradually." (Oct. 6)

     Neel Kashkari (Minneapolis*): "My preference would be not to raise rates

again until we actually hit 2% core PCE inflation on a 12-month basis, unless we

have seen a large drop in the headline unemployment rate signaling that we have

used up remaining labor market slack, or a surprise increase in inflation

expectations." (Oct. 2)

     Patrick Harker (Philadelphia*): "I'm still penciling in an increase in

December and three increases for '18, assuming that inflation comes back."

(Sept. 29)

     INFLATION

     Williams (San Francisco): "I view both inflation picking up faster than

expected in early 2017 and now the pullback as just part of the variability

that's going to happen. I don't see any signs that somehow the inflation process

is fundamentally changed." (Oct. 17)

     Yellen (Chair*): "With the ongoing strengthening of the labor markets, I

expect inflation to move higher next year. Most of my colleagues on the FOMC

agree." (Oct. 15)

     Rosengren (Boston**): "We're starting to see that tightness in the labor

market appear in wages. We haven't seen it appear in prices yet but my

expectation is we'll see it over the next year or two a little more clearly than

we have to date." (Oct. 14)

     Kaplan (Dallas*): "As the labor market tightens I expect cyclical pressures

(on inflation) to keep building but I'm conscious of the fact that they're being

offset to some extent by structural factors" such as technology and

globalization. (Oct. 13)

     Lael Brainard (Governor*): "Frequent or extended periods of low inflation

run the risk of pulling down private-sector inflation expectations, which could

amplify the degree and persistence of shortfalls." (Oct. 12) 

     Bullard (St. Louis): "Inflation's low. I think it's expected to remain low

here in the U.S. and abroad. We should accept the fact that real interest rates

are pretty low." (Oct. 12)

     Evans (Chicago*): "We should be willing to push inflation above 2%" and "I

don't think we should fear 2.5% inflation." (Oct. 11)

     George (Kansas City): "It seems reasonable to expect that inflation will

gradually rise as labor markets tighten further and the effects of past oil

price declines, dollar appreciation, and idiosyncratic price movements fade."

(Oct. 11)

     Bostic (Atlanta): "With a relatively strong and still-improving labor

market and stable inflation expectations, I am looking for inflation to drift up

to 2% over the next year or so." (Oct. 11)

     Dudley (New York*): "While some of this year's shortfall can be explained

by one-off factors -- such as the sharp fall in prices for cellular phone

service -- its persistence suggests that more fundamental structural changes may

also be playing a role." (Oct. 6)

     Kashkari (Minneapolis*): "Our policy should focus on supporting inflation

to ensure that we are on track to return to our 2 percent target." (Oct. 2)

     Harker (Philadelphia*): "If we start to see wage acceleration, if we

continue to see a tight labor market, that would be the precursor to inflation.

So we don't need to see inflation itself, although it would be nice to see some

signs of that." (Sept. 29)

--MNI Washington Bureau; +1 202-371-2121; email: jean.yung@marketnews.com

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