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 on Oct. 31-Nov. 1.

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

exclusively to MNI.

     INTEREST RATES

     Charles Evans (Chicago*): The data have not been strongly indicating that

we should continue with a rate increase. (Dec. 5)

     Robert Kaplan (Dallas*): From a risk management point of view, I think it

would be wise to take the next step. (Dec. 5) 

     William Dudley (New York*): There's a reasonable case for a rate hike in

December. I think if the economy stays on the same course, we'll continue to

gradually remove monetary policy accommodation. (Dec. 1)

     Janet Yellen (Chair*): We continue to expect that gradual increases in the

federal funds rate will be appropriate to sustain a healthy labor market and

stabilize inflation around the FOMC's 2% objective. (Nov. 29)

     James Bullard (St. Louis): Some of the numbers in the U.S. on the growth

side do look a little bit better, but I would still say overall we're in this

rather low(-interest-rate) regime. And that is making me think that the policy

rate is about right where it is, maybe with a little bit of upside risk. (Nov.

29)

     Neel Kashkari (Minneapolis*): If inflation keeps falling, no reason to tap

the brakes. (Nov. 29)

     Jerome Powell (Governor*): I think the case for raising rates at our next

meeting is coming together. (Nov. 28)

     Loretta Mester (Cleveland): To my mind the gradual path still remains the

appropriate path of policy and we still want to continue to take back some of

the accommodation we felt necessary to put in. (Nov. 16)

     Eric Rosengren (Boston): It is quite likely that unemployment will fall

below 4 percent, which is likely to increase pressures on inflation and asset

prices. That suggests the need to continue to gradually remove monetary policy

accommodation, which is quite consistent with market expectations of another

increase in December. (Nov. 15)

     Raphael Bostic (Atlanta): I think it will be appropriate for interest rates

to rise gradually over the next couple of years, as our policy position is still

very accommodating rather than neutral. How gradual that pace will be depends on

the strength of the incoming macroeconomic data and what it implies for the

economic outlook. (Nov. 14)

     Patrick Harker (Philadelphia*): I still have another 25 basis point rate

increase penciled in for this year, although perhaps I should say, 'lightly

penciled in.' (Nov. 12)

     John Williams (San Francisco**): In my view, one more rate increase this

year and something like three next year is the right mix of monetary policy to

best manage our two goals over the next few years. (Nov. 3)

     INFLATION

     Evans (Chicago*): I do worry that inflation expectations have not yet moved

up in a noticeable way that I think is on the path to being more consistent with

2 percent. I think that makes it more challenging to get inflation up to 2

percent. (Dec. 5)

     Kaplan (Dallas*): My team believes we're going to get to 2 percent in the

medium term. It may be slower and more uneven than people expect. There's a

headwind in terms of inflation: technology-enabled disruption. (Dec. 5)

     Dudley (New York*): I personally don't think that the fact that the

inflation rate's a little bit below 2% -- I don't think it's a huge problem.

(Dec. 1)

     Yellen (Chair*): In my view, the recent lower readings on inflation likely

reflect transitory factors. As these transitory factors fade, I anticipate that

inflation will stabilize around 2% over the medium term. (Nov. 29)

     Bullard (St. Louis): I am a little concerned that we'll send the wrong

signal in December by raising the policy rate, and that depresses inflation

expectations, and possibly cements in a lower inflation rate over the forecast

horizon. (Nov. 29)

     Kashkari (Minneapolis*): I am waiting to see where the next inflation

measures come out. If inflation keeps falling, no reason to tap the brakes.

(Nov. 29)

     Powell (Governor*): Fed "can afford to go more slowly" on raising interest

rates if below-target inflation proves persistent. (Nov. 28)

     Mester (Cleveland): I'm not as troubled by where inflation is today. I

think there's good reason to think it will back up to 2%. (Nov. 16)

     Rosengren (Boston): my own conclusion is that temporarily lower prices in

the communication sector -- along with the more restrained, but still

noticeable, response to low unemployment in these three sectors -- help explain

the recent misses in the Federal Reserve's inflation target. These findings

suggest that while inflation has been low, due to temporary factors, the pattern

of observed inflation is still consistent with SEP forecasts of a gradual rise

toward the 2% target in coming quarters. (Nov. 15)

     Bostic (Atlanta): While I'm still holding to the view that the recent

weakness largely reflects idiosyncratic noise, I'll be watching the next few

inflation reports closely for signs of a pickup. (Nov. 14)

     Harker (Philadelphia*): With a labor market this tight, inflation is likely

to reassert itself at some point. Might be in a wait and see mode if underlying

U.S. inflation is stagnated next year. (Nov. 12)

     Williams (San Francisco**): If inflation does continue to be coming in

lower than we're expecting ... then it would be appropriate for us to adjust

what we actually do. (Nov. 3)

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

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